Hong Kong’s banks are lagging their European counterparts in preparing for Basel II with most still at the early stages of project planning, according to a report by consultants KPMG.Only half of Hong Kong’s banks have started Basel-related projects for both credit and operational risk, compared with 71% of European institutions and 69% of institutions worldwide, the survey said. Moreover, a quarter of Hong Kong respondents are still in the process of establishing teams to address the new credit risk requirements outlined in Basel II. This compares with just 14% of European institutions.
None of the Special Administrative Region banks surveyed have moved beyond the planning and assessment stages for credit or operational risk. European banks, however, have progressed significantly further, with 19% of institutions designing systems and 9% either implementing or testing credit risk models. Meanwhile, 8% of European banks are designing operational risk processes and systems, with a further 8% either implementing or validating models.
“Implementation [of Basel II] is due in 2006, but work needs to start long before then to achieve implementation on time,” said Martin Wardle, financial sector partner for Basel at KPMG, based in Hong Kong. “Banks seem to have taken on board the benefits of adopting an advanced risk management approach. Those organisations that haven’t started yet will need to work very quickly if they are to meet the deadline and have any chance of reducing their capital requirement.”
More on Risk Management
ABSTRACT This paper shows that traditional measures of bond systematic risk based on unadjusted past returns have very large downward biases. After we develop an improved method for calculating the market...
ABSTRACT This paper studies the approximation of extreme quantiles of random sums of heavy-tailed random variables, or, more specifically, subexponential random variables. A key application of this approximation...
ABSTRACT Because publicly available measures of deposit runoff risk are scarce, regulators' models to measure interest rate risk in the banking book are based on very coarse assumptions about the allocation...
ABSTRACT This paper analyzes and quantifies the idea of model risk in the environment of internal model building. We define various types of model risk including estimation risk, model risk in distribution...
Sign up for Risk.net email alerts
Sponsored video: MarketAxess
Sponsored video: Tradeweb
Multifonds talks to Custody Risk on being nominated for the Post-Trade Technology Vendor of the Year at the Custody Risk Awards 2014
Sponsored webinar: IBM Risk Analytics
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.