Two thirds of British banks are only willing to do the “bare minimum” to meet the requirements of Basel II in order to avoid problems with regulatory bodies.
A recent study has shown that two thirds of British banks are taking a minimalist approach to compliance with Basel II. The accord, which regulates a bank’s reserve capital and requires significant improvements in risk management, is due to come into effect in the UK at the end of the year. UK legislation to support the Basel II accord is known as the Integrated Prudential Sourcebook.
A number of conclusions can be made on the basis of the survey’s results. First of all, British banks view Basel II as just another regulation that has to be adhered to. Secondly, British banks intend to do as little as possible to meet the provisions of Basel II. In other words, they simply want to avoid any problems with the regulatory bodies. It appears that the sector’s supervisory organizations now have their work cut out trying to convince banks of the competitive advantages of Basel II.
“InfoWatch has carried out its own research which revealed that 73% of Russia’s banks recognize the competitive benefits of Basel II for the country’s banking sector as a whole, with that figure rising to 79% for individual banks. Relations with the country’s banking regulator, the Central Bank, came last in the reasons given for compliance,” points out Denis Zenkin, marketing director at InfoWatch.
Source: vnunet.com
