UK banks set to spend £2.5bn on Basel II implementation, says Accenture

Complying with Basel II regulations could prove a long and difficult process, with UK banks estimated to spend £2.5 billion doing so, a new report suggests.

A survey of 63 banks in Europe and North America carried out by the consultancy Accenture found dwindling optimism and rising predicted costs for the implementation of Basel II. US banks are lagging European and UK banks, largely because of disputes between different regulators.

US banks, in general, estimate the cost of compliance as being slightly lower than their European counterparts. But Andrew Wilson, Accenture managing partner for risk and regulation management in North America, said: “Last year, most US respondents didn’t have a handle on the cost. They have come in lower than the Europeans, and in part that reflects the phase they are in.”

Most European banks expect to spend over €50 million each to implement Basel II, with one UK bank expecting to spend over €200 million. Of the implementation cost, 36% is expected to go on IT spending, 52% on improving credit risk management and 12% on improving operational risk management, the survey found.