1. Basel 2 - Obligation or Opportunity
Basel 2 - Obligation or Opportunity ? What does it mean for Korean Corporations
David Edwards
Chief Executive Officer
Standard Chartered First Bank, Korea, Limited

2. Standard Chartered First Bank, Korea, Limited
Introductions
Mr. David Edwards, Chief Executive Officer of SC First Bank
Formerly CRO, Standard Chartered Bank Group
Standard Chartered Bank, Group is a Basel 2 Compliant Advanced IRB Bank
SCB Group has obtained Basel 2 A-IRB Compliance from the FSA, UK on its international operation spanning 57 countries.
FSA reviews included portfolios owned by Standard Chartered First Bank, Korea, Limited
November
Standard Chartered First Bank, Korea, Limited

3. What is the best thing to come out of Switzerland?1 2 3 4
November
Standard Chartered First Bank, Korea, Limited

4. Standard Chartered First Bank, Korea, Limited
The 3 key messages 1
Basel 2 will change the way banks run their businesses 2
SC First Bank as Korea’s International Bank leads the way 3
What Basel 2 means for you
November
Standard Chartered First Bank, Korea, Limited

5. Standard Chartered First Bank, Korea, Limited
Why Basel 2?
Fine balance between
Risks and Capital
Concentrated Risks may lead to
Systemic Losses or
Market Disruptions
November
Standard Chartered First Bank, Korea, Limited

6. Standard Chartered First Bank, Korea, Limited
What is Basel 2
Financial Stability &
Sound Banking Supervision 1 2 3
Minimum Capital
Supervisory Review
Market Discipline
November
Standard Chartered First Bank, Korea, Limited

7. Standard Chartered First Bank, Korea, Limited
Some more?
Probability of Default (PD)
(within 12 Months)
Loss Given Default (LGD)
(e.g. 80%)
Credit Risk
Operational Risk
Exposure at Default (EAD)
Market Risk
November
Standard Chartered First Bank, Korea, Limited

8. How banks will change the way they run their businesses.
Basel 2
All Banks may
Reduce committed limits
Request more security
Risk Sensitive Approach
To Capital Management
Price for “Risk”
Hide from you
Swarm to you …
November
Standard Chartered First Bank, Korea, Limited

9. What does this all mean? Bank Strategy More Security
Risk based Pricing
Bank
Strategy
Risk Insensitive
Growth Models
Short-term
Facilities
Bank
Strategy
Higher
Limit Utilization
Basel 1 Growth Strategy
Basel 2 Growth Strategy
Growth Strategy based on deals & transactions
Growth Strategy based on the overall Customer Relationship
November
Standard Chartered First Bank, Korea, Limited

10. SC First Bank is Korea’s International Bank
What do we know about Basel 2?

11. What is Basel 2 to Standard Chartered Bank?
The Basel 2 Machine
Governance
Models
Data & Systems
Rating
Experts & Practitioners
Pricing
Policies & Standards
In use since early 1990s
Basel 2
In our “DNA”
November
Standard Chartered First Bank, Korea, Limited

12. Standard Chartered First Bank, Korea, Limited
The Basel 2 Journey
Road to Basel II is a long journey…
Over $100 million invested by Banks
Stage 5:
Basel 2
Compliant
Stage 4:
Application &
Reviews
Stage 3:
Meet All Requirements
Stage 2:
Models in Use
Stage 1:
Organization Ready
Base Camp:
Data & Systems Ready
$100,000,000
November
Standard Chartered First Bank, Korea, Limited

13. Basel 2 – The journey continues
Final Destination:
A Major Global Bank
Stage 7:
Models Refined
Stage 6:
Risk in “DNA”
Stage 5:
Basel 2
Compliant
Northern Rock
was Basel 2 Compliant
Stage 4:
Application &
Reviews
Stage 3:
Meet All Requirements
Stage 2:
Models in Use
Stage 1:
Organization Ready
Base Camp:
Data & Systems Ready
$100,000,000
November
Standard Chartered First Bank, Korea, Limited

14. Basel 2: What does it means to you?
For Banks
Good Risk Management Practices
Less Reliance on External Ratings
Sound Institutions
Conscious of “Limits”
For Regulators
Financial Stability
Progress on risk based banking supervision
For Customers
Transparency on Banks
Products tailored for your risk profiles
More collateral required
Your risk profile = bargaining power
For Korea
Sound Banking Environment
Internationally Competitive Market
Supports “Financial Hub of North East-Asia”
November
Standard Chartered First Bank, Korea, Limited

15. Standard Chartered First Bank, Korea, Limited
The 3 key messages 1
Basel 2 will change the way banks run their businesses 2
SC First Bank as Korea’s International Bank leads the way 3
What Basel 2 means for you
November
Standard Chartered First Bank, Korea, Limited

16. Standard Chartered First Bank, Korea, Limited
Talk to us!
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November
Standard Chartered First Bank, Korea, Limited