Banks in dark over Basel cost

Johannesburg - A global survey of banks sponsored by Accenture, Mercer Oliver Wyman and SAP has revealed that uncertainty among many of the world's largest banks on the total cost of compliance with the Basel II program is broad, with nearly a third saying they remain unsure of the total cost.

The survey conducted by the London-based Financial Times research center between April 1 and May 13, sampled approximately 200 of the world's best quoted banking institutions.

The survey also noted that of those banks providing estimates, most banks with assets under $100bn expect price tags of €5m or less while nearly two-thirds of larger banks project costs of more than €50m.

The majority of banks said they see significant benefits from Basel II, especially in improved capital allocation and better risk-based pricing.

More than 70% of banks surveyed are planning to adopt Basel II's advanced regulatory approaches on both the credit risk and operational risk sides.

The survey further stated that there are common expectations of increased competition in retail and small-and-medium-enterprise (SME) lending, consolidation among corporate and specialised lenders, and more selective approaches to emerging-market credit.