Global systemically important banks have a way to go in meeting new regulatory principles designed to boost their risk management practices.
The Basel Committee on Banking Supervision issued a progress report today that looks at banks’ efforts to adopt new principles for effective risk data aggregation and risk reporting. The principles, which were published in January 2013, are part of an effort to improve banks’ risk management practices, decision-making processes and resolvability.
Banks that are designated as global systemically important banks (G-SIBs) are required to implement the principles in full by 2016. However, the Basel Committee says that 10 of the 30 banks that were identified as G-SIBs in 2011 and 2012 report that they will not be able to fully comply with the principles by the deadline.
“The main reason reported is large, ongoing, multi-year IT and data-related projects,” the committee notes.
The report indicates that while banks have taken steps towards implementing the principles, “many banks are facing difficulties in establishing strong data aggregation governance, architecture and processes, which collectively represent the initial stage of implementation.” Instead, they are resorting to extensive manual workarounds, it notes.
The Basel Committee says that it will continue to monitor the banks’ progress towards meeting this deadline. It also recommends that national regulators apply these same principles to banks that are identified as domestic systemically important banks three years after their designation.