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BCBS 239: The marathon that went underground

​The deadline, of 1st January 2016, for G-SIBs to comply with BCBS 239 passed – unnoticed by most – and all went quiet. From the BIS at least.  There has been even less information in the public domain regarding the requirements or progress of the D-SIBs.

Yet behind closed doors, many of the banks' current self-assessments indicate that they now consider themselves less compliant than they did at the time of the last BIS report on banks' preparedness. Of course, they have not actually become less compliant in the last couple of years.  But, as a result of the work that they have done to date, they have developed a much clearer understanding of the scale of the work required to become compliant, which had resulted in their more pessimistic reappraisal.

So what should banks focus on now to ensure the ultimate success of their BCBS 239 programmes?  The risk is that these programmes run out of puff, either through diverted funding or simple lack of focus as other priorities emerge, and end up walking the last ten miles of their marathons or, worse still, quietly dropping out.

Completing the BCBS 239 marathon strongly will require senior management team to continue to articulate – and potentially refine – a clear, multi-layered vision for the business benefits of the work that is still to be done, in clear and specific terms.  This vision needs to be multi-layered because BCBS 239 has such far-reaching requirements, stretching across all reporting that is used to support risk-based decisions.  Scope therefore covers Risk, Finance and Treasury functions at the Group level and in business lines, as well as all of the upstream data flows, potentially stretching all the way back to front office booking systems.  Hence, the senior management through the bank need to ensure that in all key areas there is a vision for the business benefits of BCBS 239 that is specific and meaningful, and ensures continued clear direction to the remediation work underway in every area of the bank.

At some point, there will be another crisis that requires banks and their supervisors to have rapid access to reliable data and reports.  And if the banks are clearly BCBS 239 non-compliant, there then will be a big, ugly post mortem in which both regulators and banks will end up on the wrong side of history.

Baringa can help banks avoid this risk with services ranging from BCBS 239 health checks and detailed compliance planning, through to development of data quality frameworks and design and implementation of risk reporting.

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