Australia and Singapore lead Basel II implementation in Asia

Australia and Singapore’s banks are leading the Asia-Pacific region when it comes to the implementation of Basel II, according to a report released this week by Standard and Poor’s. But even banks operating in these countries face considerable challenges in meeting deadlines set by their national regulators.

Banks in Australia and Singapore are making good progress in implementating Basel II, largely because of their own preparations but also because of the reasonable regulatory timetables set by the Australian Prudential Regulatory Authority (Apra) and the Monetary Authority of Singapore (MAS), says Ryan Tsang, a financial services ratings credit analyst at Standard and Poor’s in Hong Kong. “Australia and Singapore are doing more and progressing faster,” he says.

But banks in Australia and Singapore still face a number of obstacles, particularly in terms of data collection. For instance, Australian banks lack data that covers periods of economic instability because, in recent years, their losses have been low and “unrepresentative of losses expected over a full economic cycle”, the report says.

Elsewhere, Asian banks are also making steady progress towards Basel implementation, although the issue of data collection is a challenge in all territories. Standard and Poor’s found that Hong Kong and Japan are making reasonable headway, while other nations are looking at slower implementation programmes.

“Good progress appears to be occurring in some other markets, including Hong Kong and Japan, while other countries, including Korea, China, Thailand and Malaysia, are opting for a more gradual and phased implementation of Basel II,” says Tsang.