>Basel Capital ratios are based on highly diversified loan...

>Basel Capital ratios are based on highly diversified loan >portfolios, if there is any concentration in the loan >portfolios signfnicant capital penalities are applied to >standard capital ratios.

>In this case not only are there huge concentrations they >all loans are essentially to related parties.

What you say is true.

I was intending to make the point, against all this talk of the BNB debt burden, that (formally) the capital adequacy ratios of most of the banks funding BNB would look alot worse than the BNB balance sheet!!

Another key point of difference is that, up to fairly recently, a bank could expect to find lots of short term money to fund much larger long term debt burdens than BNB is funding over it's capital base.

As the thread title states - this is a crisis of confidence.

Idiotic assessments of the capital adequacy against background noise of "asset impairment" is causing a local firestorm of bad sentiment around BNB.

On the facts, BNB should survive (at least until the next major refinancing event). The immediate risk is that the bankers don't hold their nerve ... and do something terribly stupid.