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Concerns raised over Asian Basel II adoption

Different areas of Asia are likely to adopt new bank capital rules – namely the Basel II accord – at different times, leading industry figures have suggested.

There is speculation that this may lead to questions about then market's fairness, given that Basel II might be more difficult to implement in emerging economies which do not possess wide-ranging risk management systems.

Basel II, designed by global standard-setting body the Basel Committee on Banking Supervision, was primarily intended for G10 nations but Asian countries are keen to espouse the new rules too.

The new rules provide advanced measures for assessing risk and working out how much capital is used to guard against potential shocks – and Hong Kong and Singapore are among those keen to adopt them as soon as possible. Other countries, though, would attempt to phase them in over a longer period of time.

Loh Boon Chye, head of global markets for Asia at Deutsche Bank, was quoted by Reuters as telling a conference: "With different applications, I'm not sure it goes in any big way to try and create a level playing field. It suggests that it will probably be difficult to implement."

He added that it would be wise for a common timetable for Basel II adoption to be put in place.