Bankers believe that compliance with the new Basel II accord will bring important benefits to banks, according to a recent global survey of the financial sector by Ernst & Young.
The survey on the business impact of Basel II found that bankers were optimistic that the new accord would bring more dynamic portfolio management, greater use of hedging and an increased use of risk-based pricing.
Over three quarters of the banks surveyed said that they expected the accord to “change the competitive landscape of banking”, with those organisations faster at adopting the new measures benefiting at the expense of those adapting more slowly.
Patricia Jackson, partner at Ernst & Young UK, said that larger banks should see the most benefits. “The more sophisticated, larger banks that have the ability to leverage the new risk data will gain a significant advantage [and] there will be winners and losers,” she said.
The report also claims that this will come as bad news to Canadian banks, that have reported that they are likely to take much longer than initially expected to implement the accord.
“The age and complexity of older banking systems, combined with the sheer size and complexity of the task of implementing Basel II, has taken the Canadian institutions by surprise,” according to the report.