Most banks and financial services firms intend to devote more resources to regulatory change over the next two years, and difficulty lies ahead for many businesses. Major areas of budget on are IT and HR. Both are expensive, and resources are finite.
There are talent shortages in the market for financial services staff with
regulatory skills. That’s reflected in rising salaries in regulatory roles in financial services, where salaries have risen by 11%, according to PricewaterhouseCoopers.
Many businesses cut back on compliance staff and consultants when they were desperate to reduce costs during the height of the financial crisis. With increasing legislation they have inadequate systems and lack of in house resources to cope with the increasing demands for more detail in shorter timescales.
The wheel of change spins ever faster and it is harder for internal staff to keep up with requirements. Many banks in this region have to report to more than one regulatory regime and what happens in USA and Europe tends to also find its way here. For example:
Basel III reforms, under which banks must increase the capital and liquidity buffers they impose. The new rules were first announced in 2010, but the size of the buffers required under the rules has repeatedly been changed. This year alone, the Basel Committee on Banking Standards has extended the timetable for implementation and redefined “liquid assets,” changing the rules of engagement again and again for the banking sector.
“Management consulting firm Booz & Company recently conducted a study of capitalisation and liquidity levels at 64 regional banks. The results were sobering, as many institutions face the prospect of capital and liquidity shortfalls in the near term, particularly as Basel III rules are phased in between 2013 and 2018. In response, banks will need to manage their capital and liquidity levels more proactively — and soon.The capital shortfall for GCC and Levant banks could increase from about $11 billion in total in 2012 to a range of $12 billion to $27 billion in 2017, based on various economic scenarios ”
<em>http://gulfnews.com/business/banking/gcc-banks-could-face-capital-and-liquidity-shortfall-1.1298026
and
http://www.thenational.ae/business/industry-insights/finance/gcc-and-levant-banks-warned-against-complacency-on-capital-requirements-ahead-of-basel-iii”
Last Wednesday, Sultan Bin Nasser Al Suwaidi the U.A.E. Central Bank Governor warned in his speech, at the Global Financial Markets Forum in Abu Dhabi, that Basel III banking rules could curb the growth of small and medium-sized business worldwide.
As our recent blog post mentions the Markets in Financial Instruments Directive (MiFID) EU reforms that will affect anyone dealing in or processing financial instruments across Europe is to be introduced but it is still not clear when MiFID II will be implemented and in what form – only that the new regulation is coming – due for implementation in 2015
Solvency II Directive: EU reforms intended to harmonize insurance regulation – details still to be confirmed, due for implementation in 2016
› G20 Financial Transactions Tax: efforts to introduce a “Tobin Tax” across the EU continue despite opposition in many parts of the world – details and timetable unknown
› Global derivatives regulation: watchdogs around the world are negotiating over how to police the $700 trillion over-the-counter derivatives market – details and timetable unknown
And there is a lot more e.g. Islamic Banking compliance, FATCA compliance.
In such circumstances it is important that a bank has a regulatory reporting system framework that can take away the black magic and dependence on scare resource. The system should automate the ETL processes and be able to adapt rapidly to the changing requirements.
Hard copy reports will soon be replaced by electronic XBRL style reporting formats. As new technology such as parallel processing and in memory processing becomes more widely available central banks own systems will get faster and their appetite for even more data to process will become even more voracious.
When banks globally are all reporting against the same regulatory frameworks then the local regulatory report formats are all much the same data content with variations on the calculation formulas. This allows a standard reporting framework built, on standard industry technology, to be quickly and cost effectively adapted to local requirements – without need to restructure the banks operational systems and charts of accounts.
BRSAnalytics has been proven over the last 7 years to address the needs of most mid-sector banks. To find out how it can help you to realise your compliance strategy while reducing risks and costs please contact us for a demonstration.
Call: Hasan on 00971 3365589
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