Key mainland banks will implement Basel II, an international agreement governing the capital adequacy standards of banks, to offer a more sophisticated formula of tallying a lender's capital adequacy. The China Banking Regulatory Commission will implement the agreement in stages beginning in 2010, starting with large commercial banks that have overseas business at that time, according to the South China Morning Post. This year, Hong Kong banks were among the first in the world to comply with Basel II, which takes into account a bank's operational risk as well as credit risk, setting a standard that better reflects the potential for loss. The CBRC has stated that the implementation of Basel II will strengthen mainland firms as they face more competition from foreign banks entering a domestic market that opened this year in accordance with the nation's World Trade Organization agreement.