Nordea receives Basel II approval

Source: Nordea

Nordea has received approval to use its internal credit risk models according to the new capital adequacy rules (Basel II).

The approval applies for the portfolios Corporate and Institutions, which cover more than 50 per cent of Nordea's credit portfolios.

The approval covers all Nordic countries where Nordea has exposure towards the Corporate and Institutions segments.

Nordea has major operations in all of the four Nordic markets and hence the approval has required extra coordination efforts from the financial supervisory authorities in the Nordic countries. Therefore we are very satisfied with receiving the approval now, says Arne Liljedahl, Group CFO.

Calculation and reporting of capital adequacy will in the second quarter be based on Basel II.

Basel II is a regulatory framework for calculating and reporting risk-weighted assets. When assessing credit risk banks can choose between different approaches. Nordea has in step one adopted the foundation Internal Ratings Based (IRB) approach for its Corporate and Institutions portfolio and will gradually apply the advanced IRB method. The next step will be to start the implementation of Retail portfolios according to the IRB method.

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