European banks to spend $4bn on Basel II compliance

finextra news: European banks to spend $4bn on Basel II compliance:

08 January 2004 - Europe's banks will spend almost $4bn on credit risk management software and services over the next two years in order to comply with Basel II regulations, according to forecasts by Datamonitor.

Spending will reach $1.93bn in 2004 and peak at $2bn in 2005 as firms scramble to meet the 2006 deadline for compliance.

Datamonitor says preliminary activities such as regulation interpretation and business impact planning in banks are now giving way to IT implementation.

According to the research, Switzerland and Germany currently stand out ahead in Basel II efforts in Europe. Datamonitor says this is due to strong regulatory pressures at a local level associated with capital adequacy requirements.

The UK, Spain, Benelux and the Nordic countries are midway in terms of Basel II implementation but banks in France and Italy are lagging in preparation.

Datamonitor says any banks that lag behind in implementing Basel II compliance systems will provide technology vendors with 'rich pickings'.

Despite having progressed with Basel II, Datamonitor says the UK is still one of the countries - along with France and Italy - that will lead growth rates in credit risk/Basel II spending. According to the research, these countries have either a larger proportion of financial firms that are late in preparing for Basel II or the disparity in preparation levels between the leaders and laggards is wider.