Andrew Charlton-Std.Chartered


Presentation Description

No description available.


Presentation Transcript

Basel II Implementation Challenges for a Global Bank:

Basel II Implementation Challenges for a Global Bank Mumbai, March 13 Andy Charlton Group Head, Basel Implementation

Standard Chartered’s Basel Challenge:

2 Standard Chartered ’ s Basel Challenge 56 countries… scale and complexity varies widely FSA lead regulator… but all are important Different and evolving ‘Basel’ regulations… and timetables Internal consistency and standards Basel is a priority… but other strategic imperatives Standardised Foundation - IRB Advanced - IRB Standardised Advanced - IRB Basic Indicator Approach Standardised Advanced Measurement Approaches Standardised Foundation - IRB Advanced - IRB Standardised Retail - IRB Internal Models (CAD II) Basic Indicator Approach The Standardised Approach Advanced Measurement Approaches Standardised Credit Risk Wholesale Credit Risk Consumer Market Risk Operational Risk SCB approaches

Key learnings:

3 Key learnings Be clear about objectives Adopt an enterprise-wide approach Know where you stand Focus on data… and information Models: the devil is in the detail Pillar 2 will be critical Education and communication are key enablers Home-host disparities increase complexity

Be clear about objectives:

4 Be clear about objectives Why are we doing this? compliance better risk management capital efficiency increased profitability investor community perception competitive advantage Focus on outcomes... manage the inputs The world’s best international bank Leading the way in Asia, Africa and the Middle East

Adopt an enterprise-wide approach:

5 Adopt an enterprise-wide approach Successful Basel II implementation requires engagement across the bank Basel II is not a Risk project… or a Finance project… or a Compliance project… or an IT project or… Support engagement through inclusive governance structures Top management engagement is essential In-country engagement is vital Implementation is a programme of continuous improvement Adapt and adopt in BAU as much as possible Group Project Steering Committee PSC PSC PSC PSC Outcome based workstreams Country PSC Country coordinators Governance Compliance Audit Risk Finance Businesses

Know where you stand:

6 Know where you stand Self assessment must be done in detail… with rigour Ensure robust process to address initial non-compliance Ensure audit trails and transparency Basel regulations emphasise the importance of consistent policies and procedures Self Assessment

Slide 7:

7 Focus on data and information Basel II requires data to be managed in a more robust manner Governance, infrastructure, assurance all require attention No shortcuts to robust data for models Focus on reporting… early but retain flexibility Reliable information in critical to Use Use of information is likely to be key to generating lasting business benefits WB Data Warehouse Calculation & Reporting tool

Models – the devil is in the detail:

8 Models – the devil is in the detail IRB modelling expectations very prescriptive Robust data is essential base Good governance and evidence is critical Senior management challenge is vital Appropriate MI reinforces Use Education is a major challenge Models inform judgement. They are not a panacea Meet minimum standards but establish a process of continuous improvement

Pillar 2 is critical:

9 Pillar 2 is critical Pillar 2 and supervisory review determine capital requirements It’s not all credit, market and operational risk ICAAP should enhance existing capital management processes Home/host challenges will add to complexity Pillar 2 requirements still lacking definition Capital Supply Internal Drivers Risk Profile & Business Objectives Capital Raising Balance Sheet Management Capital Management Capital Ratio Targets Individual Capital Guidance (FSA) Capital Management Policy and Objectives Capital Deployment (Subsidiary & Country) External Drivers Investor Community Regulators Capital Requirements Capital Demand Pillar 2

Education and Communication are key enablers:

10 Education and Communication are key enablers Complexity means excellent communication and engagement are essential Regulations seek to embed cultural change Fear of technical complexity to overcome Education required to establish compliance … But education to support Use is a better challenge Education supports Use and delivers objectives

Home/host disparities increase complexity:

11 Home/host disparities increase complexity Differing regulations… differing timelines Global coverage vs local coverage Multiple reporting requirements Multiple applications... multiple ICAAPs Inefficiency... resource contention... additional cost All regulators are important. Manage accordingly!


12 Conclusion Establish desired outcomes and focus on them Take enterprise-wide approach Understand complexity and resource appropriately Recognise that Basel II is a long term commitment to continuous improvement Local banks and international banks face similar challenges but scale and multi-geography adds complexity

authorStream Live Help