Johannesburg, 24 Mar 2004
Local banks are preparing their systems and processes for the introduction of the New Basel Capital Accord (Basel II), but there has been no real investment in Basel initiatives yet.
This is according to Marianne Prins, key account manager at Compuware Corporation SA.
She says there have not been many local Basel-related projects as "the eyes of financial leadership are on the European and US financial industries".
The current Basel Capital Accord was drawn up by the Basel Committee on Banking Supervision in 1988, but was later seen to be outdated. Basel II is set to be implemented worldwide at the end of 2006.
The accord determines how much capital banks must set aside to cover unforeseen hazards. This it does by prescribing how to identify, measure, monitor and manage the full range of risks to which the banks are exposed. The greater the risk, the greater the amount of capital needed to cover it.
"Initial investment has been made in terms of gaining an understanding of what Basel means in terms of risk mitigation and the steps that must be taken to ensure that risk is averted from a systems point of view," Prins says.
"Now our institutions are waiting for the publication of the final accord before taking further action," she says.
"However, within the context, financial companies are ensuring that any new projects commissioned in the interim are compliant with Basel II as it currently stands."
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