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Basel II

 

Basel II

 

Contact:

Aon Credit International Insurance Broker GmbH
Heidenkampsweg 58
20097 Hamburg
Deutschland

Tel: +49 (40) 3605-3300
E-Mail: info [at] aon-credit.de

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Basel II and Rating


BASEL II
Basel II – Threat, chance or scare crow for medium sized companies, degenerated into a battle cry in many discussions, popular fig leaf for planned interest increases and credit denials! The reorganization of credit allocation is like a paradigm shift.

Targets of this reorganization are the improvement of the system stability by added supervision, by disciplining the market participants and by a mandatory minimum capitalization.

Usually, credit institutions do no lend their own money, but money they borrowed themselves, which of course requires a special responsibility. Therefore it is mandatory according to Basel II, to underlay lower creditworthiness with a higher capitalization. The logic of this approach is quite convincing, but causes a considerable increase of costs as, also for banks, outside capital is cheaper than equity capital. So the following rule applies: the higher the risk the higher the required equity capital and loan costs.

In future, the creditworthiness of the customer will be measured by its rating, a kind of grade given by the credit institutions, which is supposed to reflect the probability of insolvency of the debtor. This grade is responsible for the enormous explosiveness of Basel II: Grades given by the bank and punishment of the customer through higher costs.

 

 


Rating
  • How are the companies rated?
  • Can medium sized companies influence this rating – and if they can, how?
  • Are there any alternatives?
A rating is effected internally by the respective credit institution and externally by a rating agency. The credit institution is always required to do its own rating, regardless if it uses an examination of external rating agencies or not. If and how much the banks rely on the judgment of external rating agencies depends largely on the quality and reputation of the respective rating agency. Therefore we observe the rating market for your company, talk to all important rating agencies and advise your company in selecting the appropriate institute.

An external rating can be published to document the performance of your company for your suppliers, customers, prospective customers, credit insurers, factoring institutes, other banks, employees and the public. External rating is independent, whereas during an internal rating the censor keeps always also its own best interest in mind!

Of course, companies want to influence their own rating and for sure it is legitimate to present good results, promising projects, strategies and numbers requiring interpretation accordingly with the help of a professional and open communication. Some specialists for this kind of communication became available in the meantime.

More than 75% of all companies have debts only at their principal bank and at best at one other credit institution. Therefore the internal rating becomes the Sword of Damocles. But do you really have to put all your eggs in one basket? Alternatives are factoring, third party guarantors, leasing or a reorganization of your existing credit facilities.

Make Basel II the reason to reflect on your current financing basis and your rating and plan your future with the assistance of our company.