BCBS239 the behemoth lumbers on

GFT specialists analyse the current state of BCBS239 and discuss where G-SIBs and D-SIBs go from here to complete their compliance journey.

Across the financial system, global, systemically important banks (G-SIBs) are continuing to wrestle with the regulatory behemoth that is BCBS239 as they near the compliance deadline. More so than many regulations, the sheer size and scale of BCBS239 makes it a particularly daunting challenge for banks to overcome. Annual budgets of tens of millions of dollars, and total programme costs - typically in the 50 to 130 million dollar range - attest to the scale of the challenge. With the January 2016 deadline rapidly approaching, there still remains a very large question mark over the extent to which G-SIBs will be compliant.

In January 2015, the Basel Committee on Banking Supervision published its second report on the progress made by the G-SIB banks in their attempts to comply with the 11 banking Principles of BCBS239. The report, entitled “Progress in adopting the principles for effective risk data aggregation and risk reporting” provides an update and a report on progress towards the eleven principles set out in the January 2013 BIS document.

Although general improvements have been made since the first progress report was released in December 2013, some banks have reported setbacks in their ability to meet compliance requirements. 14 of the 31 G-SIBs said they would be unable to comply with at least one of the 11 principles by January 2016.

The picture that emerges is one of many banks struggling to establish strong governance, data aggregation, architecture and processes. BCBS239 requires the implementation of a large-scale, globally strategic IT infrastructure. This is difficult enough, but it also needs the cultural, business process and governance changes to support it. The BIS has also highlighted the concern that many banks continue to rely on manual workarounds to achieve compliance.

To discuss this topic further, please get in touch with our specialists