From the Regulators

Global banks fall short in adopting new principles for aggregating and reporting risk data

By James Langton |

The world's big banks are falling short in adopting post-crisis reforms intended to improve their risk management practices, according to a report published on Tuesday from the Basel Committee on Banking Supervision.

The level of compliance with new principles for aggregating and reporting risk data is "unsatisfactory," the report finds.

The principles, published in 2013, were supposed to be fully implemented at global systemically-important banks (GSIBs) by January 2016 in order to improve their risk management practices, decision-making, and resolvability if they run into financial trouble.

However, only one bank is fully compliant with the principles, even though the implementation deadline has passed, the report finds. It says another is expected to be compliant shortly, whereas 24 others won't be compliant until the end of 2018, and four more are expected to take longer than that.

"Although many banks are expected to achieve full compliance in two to three years, the execution risk of not meeting the expected date of full compliance remains a concern," the regulators say in the report. "It is therefore critical for banks and supervisors to place a high priority on full implementation of the principles in a timely manner."

The report makes several recommendations designed to help banks reach full compliance with the principles, and notes that the Basel Committee will continue to monitor the banks' progress. It also calls on regulators to require banks that are designated as systemically-important to a domestic financial system, such as Canada's Big Banks, to implement these principles.