great majority of firms. after some adjustments, to take into account these concerns, the reduction in capital charges for small and medium enterprises ( exposures below € 1 million ) and well - provisioned past - due loans as well as the recognition of credit risk mitigants, such as collateral and guarantees, render the new framework much more favourable than the existing one. generally the capital requirements for loans to corporate are likely to fall significantly ( up to 80 % in some cases ) for excellent credit quality with credit risk mitigants, such as eligible collaterals. in the qis it was found that corporate, non - sme lending would benefit in a pan - european level from a reduction of capital requirements of 2. 5 %. the reductions would be more for corporate smes i. e. corporates with annual sales lower than €50m, and would amount to 4 %. enterprises with exposure of less than € 1 m can be treated as retail customers, resulting to a further decrease by a significant amount of capital requirements, eventually passing the benefit onto companies themselves. under the advanced approaches, the capital requirements for a loan to a corporate with pd = 1. 5 % and lgd = 45 % would be as much as 8. 9 %, whereas if the customer was an sme treated as retail would be only 4. 52 % of course the requirement for reliable data on the basis of which the banks would be able to judge the creditworthiness of their customers, may create an additional burden to smes to produce timely and accurate accounting and other financial information. however the availability of such information might also lead to more efficient management of such companies based on more informed and less intuitive decisions. what is more important is the fact that the meaningful differentiation of risk will lead to a more efficient allocation of capital. banks will be able to identify companies of high creditworthiness and offer them credit, at preferential terms, supporting thus their growth. this would benefit, not only healthy companies, including smes, which will find it easier and less costly to borrow from banks, but also the economy as a whole. however, starts - up may find some difficulties in raising loans and, therefore, other means of finance have to be further developed. especially for new technologies, where europe is lagging, venture capital is not readily available : the sums raised in 2003 were 1 / 3 below of those raised in the us and the average technology investment almost 1 / 10 of the us, thus

greek big banks ( with a market share of 70 % ) are gradually introducing irb methods, so that when the new framework will be introduced, they will be able to reduce their credit risk charges. all the more so, that mortgage credit and consumer credit, as well lending to small business, which have under the new accord a preferential treatment in relation to capital requirements, are growing much faster than the rate of growth of total credit. this, in combination with the starting high level indicates that the capital adequacy ratio in greece should remain on average above 12 %. of course the individual banks ’ capital requirements reductions depend not only on the type of approach used but also on the composition of the portfolio and its quality. banks with a larger proportion of retail credit, including credits to small & medium sized enterprises ( smes ) will experience a larger reduction of their capital requirements. also banks with collateralized exposures or with customers having a better, external or internal, rating, which, of course, reflects better quality, will have a larger reduction. the largest reduction will of course be for banks with good quality portfolios that use the most advanced approaches for the calculation of capital requirements. it is only natural and fair that banks using the more advanced approaches will benefit most. after all, the new framework is intended to provide incentives for the upgrading of the banks ’ risk management systems. however, the reduction of capital charges for credit risk should not be expected by itself to motivate banks to adopt the more advanced methods. the high costs for the implementation of the more advanced systems will discourage a number of banks. in a study conducted by pricewaterhousecoopers for the european commission, the implementation cost in europe was estimated at about € 20 - 30bn, with individual banks spending € 30 - 150 m, depending on their size, sophistication and approach used. although one cannot deny that a significant amount of these costs result from the need for regulatory compliance to the new framework, an equally large part are the result of improvements in credit risk and operational risk management systems that would have been introduced even in the absence of basel ii. basel ii has accelerated the process and should, with time, both increase shareholder value and strengthen the financial systems worldwide. in a globalised world, without many financial frontiers, the competition driven need for improved risk management systems are motivating banks to move more and more to the more advanced approaches. and this because the better measurement of credit risk would allow