Some of the world’s big banks likely won’t meet the deadline for adopting new principles for effective risk data aggregation and risk reporting designed to improve their risk management, according to a new progress report that the Basel Committee on Banking Supervision issued on Wednesday.
Banks that are considered global systemically important banks are required to implement the principles in full by 2016. In addition, the Basel Committee recommends that these principles apply to domestic systemically-important banks — such as the Big Six Canadian banks — three years from the time they are designated, which was March 2013 for the Canadian banks.
However, Wednesday’s report from the Basel Committee indicates that some banks will not meet that deadline. It notes that although the world’s big banks “are increasingly aware of the importance of this topic and have moved toward implementing the principles,” it also finds that “important challenges remain” to achieving implementation. The report also makes a series of recommendations for both the banks and their regulators to promote adoption of the principles.
Among other things, the report recommends that banks’ compliance with the principles face an independent evaluation in early 2016; that regulators carry out more in-depth examinations of data aggregation requirements to evaluate weaknesses; and that banks adopt governance arrangements for manual processes.