Loans and financial matters

No account is taken of counterparty risk in determining regulatory capital requirements under the terms of the original Basel Accord. A loan to a top-rated corporate is treated in exactly the same way as an exposure to a small, high-risk company. This state of affairs is due to change in 2006–2007 when a new Basel Accord is adopted but even then corporate loans are likely to attract a higher regulatory capital charge than retail loans.