Agenda
    Basel II background
    Basel II is an opportunity
    The data management challenge
    XBRL and Basel II
   A couple of quotes
    “Regulators and customers are demanding greater focus 
    on risk management. …This call for transparency will 
    challenge traditional business practices and will require 
    more auditable processes throughout the business” 
    Morgan Stanley analyst (on market timing), FT 11/03
    “US regulators expect Basel II will  apply to a total of 
    around 20 large US banks.  All US banks  operating under 
    Basel II will be obliged to use only the most  advanced 
    Basel II approaches for assessing banking risks, which 
    means the IRB approaches in the case of credit risk.” 
    Global Risk Regulator 10/03
       Basel II Background
            What is          The publication of the Basel II Accord will mark the end of long process that will have effectively re-
             Basel II        written the rules of banking. Basel II will affect the conduct of monetary policy and the stability of 
            Accord?          financial institutions all over the world
           What is it         To promote safety and soundness in the financial system
            trying to         To align regulatory capital requirements more closely with underlying risks
            achieve?          To offer incentives for institutions to pursue more sophisticated & effective risk management
                                                                                     New                              Full 
                                                         CP 3                        Accor                            force
                                                                                      d
                                                                                                            Parallel run
                                                                                                             Basel I + II
                                                                                                  Integrate into 
                                                                                                   National law
          When does it                                                                   EU directive
                                                                           Preparation
            happen?                                          Consultation  New Accord
                                                 Evaluation    phase
                                                  QIS 3
                                       QIS 3
                                 Oct 02     Dec 02      May 03        July 03       Nov 03             Jan 06        Dec 06
                              Basel II will significantly impact FS institutions and the change is such that preparation needs to 
                                                                                          st
          Commercial           begin now to ensure readiness for a parallel run starting 1  Jan 2006
           imperative         Key strategic decisions need to be taken now on the approach to be taken and the benefit that 
                               should be achieved over and above compliance
   Basel II is an Opportunity – not just a 
   Mandate
                                                                                                                     Basel II Opportunities:
                                                        Basel II                                                     •  Improve shareholder value
                                                                                                                     •  Economic capital savings
                                                                                                                     •  Improve/maintain credit rating
                                                                                                                     •  Improve risk management strategy 
                      Pillar 1:                         Pillar 2:                         Pillar 3:                  •  Alignment of Risk & Finance
                    Minimum                         Supervisory                                                      •  Cost reduction through organizational 
                                                                                          Market 
                      Capital                         Review                            Discipline                      process improvement
                 requirements                          Process                                                       •  Identify potentially dangerous 
                                                                                       Quantitative                    portfolio positions and other risk 
                                                  Ensure sound                                                         sources
                  Calculation and                   processes                        and qualitative 
                  Management of:                  Ensure adequate                    disclosure of
                 Credit Risk                                                       undertaken risks                 Basel II Challenges:
                                                    capital at all times                                             •
                 Operational Risk                                                      and risk                       Setting up Basel II program
                                                    Ensure motivation                                                •
                 Market Risk                       improving risk                   methodologies                      Data management
                                                    management                                                       •  Systems management
                                                    practices                                                        •  Establishing Risk Framework
                                               Data Foundation
 Key challenges – Systems & Data Management