Survey Indicates that 90% of Asian Banks Have Commenced Preparations for Pillar 2
A recent report by Financial Insights (an IDC company) surveyed senior executives in Asian banks responsible for coordinating their change management programs for risk management.
With the initial excitement long faded and deliberation on the finer points of Basel II being ironed out, banks are progressing toward fine-tuning their implementations in preparation for looming datelines. The report, entitled "Asia/Pacific Basel II Business Benefit Survey: Accessing Progress To-Date", involved interviews with the chief risk officers (CROs) and their Basel II program directors from 13 banks across the Southeast Asia region (Indonesia, Malaysia, Philippines, Singapore, Thailand), and India.
On the degree of headway these banks have made, the survey findings reveal that:
The Standardized and Basic Indicator Approaches remain the predominant capital frameworks adopted for credit and operational risks respectively, but an increasing number of banks will institute more advanced approaches by 2010.
Respondents are using their Pillar 2’s capital adequacy assessment to ensure that their capital accumulation is sufficient to support the risk assumed, and for budgeting, planning and investment forecasting.
The most apparent Basel II benefit is the wholesale upgrading of banks’ risk measurement and management capabilities, and a corresponding reduction to credit losses from their ability to mitigate risks more efficiently.
Meanwhile, the second pillar of setting up a supervisory structure for assessing soundness of risk management framework has been generating more traction amongst the Asian banks.
To ensure alignment of strategies, policy objectives and business processes with their Accord framework, banks need to secure top-down commitment, obtain leadership of an effective Basel II champion, identify and prioritize the key risks and vulnerabilities that need to be addressed, and ascertain that awareness of risk pervades though the enterprise.
Banknet's Fourth Annual CTO-CXO Summit on 15th May, 2008 will discuss on issues related to Basel II preparedness of Indian Banks ...Click here
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