The UK banking industry faces a £500 million bill for compliance with the Basel II Capital Accord, according to a survey of London-based UK and continental banks conducted by the Centre for Economics and Business Research (CEBR).
The survey identifies the need for major data warehousing and integration projects over the next three years to enable banks to aggregate their risk exposures and demonstrate the risk profile of their lending portfolios.
"Much of this investment will be spent within existing CRM and portfolio management projects," explains Douglas McWilliams of CEBR.
Although most banks have made a start on meeting the timetable for Basel compliance by 2006, fragmented systems will cause problems for many he believes.
The CEBR report suggests that the extent of IT resources required for compliance with Basel II could impact upon UK banks' ability to convert their systems in the event of an early decision to join the euro.