Hong Kong banks lagging in preparation for Basel II

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.”

Only users who have a paid subscription or are part of a corporate subscription are able to print or copy content.

To access these options, along with all other subscription benefits, please contact info@risk.net or view our subscription options here: http://subscriptions.risk.net/subscribe

You are currently unable to copy this content. Please contact info@risk.net to find out more.

You need to sign in to use this feature. If you don’t have a Risk.net account, please register for a trial.

Sign in
You are currently on corporate access.

To use this feature you will need an individual account. If you have one already please sign in.

Sign in.

Alternatively you can request an individual account here