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Mon 14 Aug 2006 04:00 AM

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Local preparations for Basel faulty, say experts

Confusion over the date that Basel II regulations will take effect in the Middle East should not deter banks from modernising their IT now, industry experts have warned.

Confusion over the date that Basel II regulations will take effect in the Middle East should not deter banks from modernising their IT now, industry experts have warned.

While Central Banks in the GCC have not confirmed the date that Basel II regulations will take effect, Alex Martin, a consultant for Regan Devine Associates in the UK, told delegates at a conference that banks should already be keeping searchable records of their transactions.

“If you configure your systems now and you’re keeping your transaction history in a data warehouse you’ll have that history and you’ll be ready to start as soon as possible,” he said.

“[Under Basel II] banks need to keep financial data for seven years and part of that is being able to store that securely and keep it in a retrievable place.”

The Basel II accord aims to improve transparency and will require financial institutions to keep more detailed records of their customers and transactions.

While the US and Europe will begin applying the measures from the start of 2007, no definite start date has been confirmed in the Middle East.

“It’s left to the discretion of the national supervisor as to when [Basel II] will be implemented. The main point is not to put the banking industry under stress,” said Martin.

Martin was speaking at a conference organised by Datawatch Middle East, providers of report-mining software such as Datawatch BDS, ES, and Monarch RMS that allow banks and other organisations to turn information from reports back into raw data that can then be searched easily.

“The Bank for International Settlements expects that every bank in this region will be demonstrating a basic compliance [with Basel II] by January 1,” said Rob Graham, head of Datawatch Middle East.

“I’m aware that some of my customers get conflicting reports but it’s a bigger decision than a local decision. Whatever advice you get from regulators out here, I would believe January 1.”

Graham also pointed out that it would benefit banks in the region to comply with international regulations now if they wanted to boost their overseas business.

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