In January 2015, the Basel Committee released and published the results of a second self-assessment by the Global Systematically Important Banks (G-SIBs) in adopting the BCBS 239 principles. In that report and in my last post, I noted that 46% of the G-SIBs stated they would not be fully compliant with all 11 Principles by the 2016 deadline. This was up from 33% as reported in the first self-assessment in December 2013.
That negative trend was primarily due to an improved understanding of the Principles and scope to be covered. In 2015, we expect material improvement in these numbers; however, we do not expect full compliance. In fact, we expect it will take the banks at least another 12 months to achieve consistent and effective implementation of these principles. The challenge for compliance is broad, complex and quite real.
With the 2016 mandate right around the corner, it will be imperative for the banks to refocus their strategies. At a minimum, they need to demonstrate compliance towards the essential requirements outlined within the second self-assessment, while continuing to strive towards full compliance for all requirements and criteria outlined in the rules text.
We at Knowledgent generally recommend that “essential requirement checkpoints” be taken within the scope of respective BCBS 239 Initiatives to confirm where a bank is, where they need to be and how they need to get there. From practical experience, this approach has turned out to be very effective as it has produced definitive and targeted action plans with dates to ensure compliance.
In subsequent posts, we’ll continue to provide guidelines and impart best practices from execution road maps for meeting the January 2016 deadline.