Basel Committee on Banking Supervision; International Organization of Securities Commissions
March 27, 2001
Circular No. 11332

Joint Report on Issues Relating to Highly Leveraged Institutions

To the Chief Executive Officers of all Bank Holding Companies, State Member Banks, Branches & Agencies of Foreign Banks, and Edge & Agreement Corporations in the Second Federal Reserve District:

In a press release dated March 22, 2001, the Basel Committee on Banking Supervision (Basle Committee) and the International Organization of Securities Commissions (IOSCO) announced the publication of a report entitled Review of issues relating to Highly Leveraged Institutions (HLIs). The report is a follow-up to the HLI Sound Practices recommendations made by the Basle Committee and IOSCO in 1999. Bill McDonough, Chairman of the Basel Committee and President of this Bank, indicated that, since 1999, senior management at many firms have strengthened their oversight of HLI activities. But, "[n]othwithstanding these advances, the Working Group [that developed the new report] has identified a number of areas where additional progress by both individual firms and the industry as a whole is needed. It remains particularly important that firms continue to enhance their exposure measurement methodologies."

The report (pdf - 88kb) appears on the Bank for International Settlements' web site, and is available here as a pdf file.

Questions on this matter may be directed, at this Bank, to Stefan Walter, Vice President, Market Risk Department, who co-chaired the Highly Leveraged Institutions Working Group.