Banks in Ireland, and the EU generally, are struggling with the regulatory traffic jam of Basel, IFRS and in many cases - Sarbanes Oxley.
According to Cormac Murphy, partner in charge of EY Ireland’s Financial Services Risk and Advisory Group, ‘Both the domestic and overseas banks operating in Ireland have been grappling with all three of these major projects and are particularly struggling to put in place the people and processes to ensure continuing compliance. In addition, we are working with a number of banks in looking at how best to bring these regulatory changes into an efficient and effective model of corporate governance’.
‘These changes will continue to be major challenges for several years to come as each represents a dramatic change in how banks are managed. We are also seeing an appetite for voluntary compliance with Sarbanes Oxley for non-SEC registrants, to avoid any perception of falling behind the competition on governance standards. This is an expensive process but the benefits are starting to become clearer - particularly if implementation is done sensibly and in consideration of other changes taking place in the organisation,’ he added.
Murphy’s comments were based on a new survey published by Ernst & Young, ‘Basel II: The Business Impact’, which indicates that the majority of respondents to the survey cited Pillar I challenges, which should be well advanced by now, as a key focus for 2006 alongside those challenges presented by the implementation of the other two pillars.
‘Banks continue to work on embedding Basel II into credit risk processes, model validation and technology planning,’ Chris Maher, principal at Ernst & Young, New York, explained. ‘Intense effort will be required for new credit processes to be embedded and understood across organizations. The survey results also indicate that work on Pillars II and III lags even further behind,’ he added. |
