Level of Preparedness of Asian Banks for New Basel II Framework

A RECENT report by global independent research and advisory firm Financial Insights examines the Basel II implementation guidelines of Asian regulators and compartmentalises how primed the Asian banks are for this regulatory overhaul. Basel II, Chapter 2: Banking Revolution for Asian Banks divides the preparedness of regional banks into four categories ranging from institutions that are assuming the essentials of the proposed accord to those that are ill prepared to adopt Basel II.
      It also discusses the best practices in credit and operational risk to create a clear strategy for effective implementation of Basel II, tackles the significant challenges remaining in banks' preparations to implement the accord, and presents Financial Insights' opinions on the future evolution of the capital framework.
      "With much of the dust from the debate of the finer points settled, Asian banks are now focusing on implementation of the enhanced risk management framework," noted Li-May Chew, senior research manager for Financial Insights Asia/Pacific Capital Markets Advisory Service. "The question plagueing regulators and practitioners alike is deciphering how prepared for Basel II the Asian banks really are."
      The regional banks can be loosely placed into one of four categories: (1) those adopting the essentials of the proposed framework; (2) the predominantly second-tier players looking for partners with which to consolidate to remain competitive; (3) the uncommitted banks embracing a neutral path and adopting a "wait-and-see" attitude; or (4) the ill-prepared banks progressing towards Basel II at their own pace.
      To a degree, domestic regulators would be the initiator of the banks' compliance efforts. Regulators in more progressive Asian countries generally feel that their banking system as a whole will be able to adjust to Basel II though adapting it to local circumstances and adjusting some of the more onerous demands. There are nonetheless exceptions, with the likes of China, the Philippines, and Malaysia opting to improve their capital regulatory systems in line with their own conditions and taking Basel II as a reference for now. Regulators should assume a pace of implementation most viable with their regulatory and competitive landscape while banks should not wait for regulators to transpose the framework into law, says Financial Insights.
      To create a clear strategy for effective implementation of both credit and operational risk, banks need to identify suitable best practices and building skills, and work on creating a buy-in from business heads on the urgency of a risk management upgrade. This is especially important for operational risk where cost is high but rewards are less tangible.
      Meanwhile, significant challenges remain in banks' preparations to implement the accord. Key complexities include developing new interfaces, creating heterogeneous databases, and locating sufficient data. Cost remains a massive hurdle, while a lack of confidence in their risk-management frameworks is impeding evolution from the strategic need assessments to the implementation phase.
      "Building the sophisticated underlying risk measurement models is only half the battle. Banks need to be able to translate these quantitative risk measures into strategic applications to deliver bottom-line benefits. Complexities remain, and adopters have to practice extreme caution in rectifying these hindrances so as not to end up circumventing issues with attempted quick fixes," remarked Li-May.

Make a Date with DAB

THE POPULARITY of digital audio broadcasting (DAB) is growing. DAB digital radio doesn't suffer from the annoying effects of interference caused by poor atmospheric conditions or electrical interference, which can affect analogue broadcasts. With digital radio the listener hears pure, clear sound all the time, as long as he is within the coverage area.
      A DAB digital radio will tune to a station at the touch of a button. A DAB receiver allows the listener to scroll through a list of stations and then tune in by pressing the button.
      Have you ever heard a familiar song on the radio and wanted to know the singer or the title? DAB digital radio sets come with a screen which carries information about the programme you're listening to. This may be the name of the track being played, E-mail addresses, and other useful information. It contains more information than that found in MP3 players.
      Some stations scroll news headlines and other up-to-date information. There are prospects that this service will develop further in time providing free information and Electronic Programme Guides (EPG) to make listening to DAB radio an enriching experience.
      You will need a new type of radio to receive DAB digital radio. Existing FM & MW (analogue) sets are unable to decode the digital signal. Unless your set carries either one of the DAB logos, it will not receive DAB digital radio.
      Check the worldwide Web for the kinds of DAB sets you can spend your money on. You can buy a bedside clock/radio or portable sets, hi-fi tuners, boomboxes, and micro audio systems with CD. There are personal DAB sets that you can carry in your jeans pocket and in your car.
      To find out about the full range of DAB sets available visit:
www.DigitalRadioDAB.com, www.simplyradios.com, and www.digitalradionow.com
     In Singapore, there are six DAB only channels. These include Cruise, Club Play, JK-Pop, Chinese Evergreens, Planet Bolly-wood, and Bloomberg Radio. Additionally, there are seven FM simulcast stations: Class 95, Perfect 10, Gold, Love, YES 93.3, News Radio, and Symphony.