1/27/2004 - Smaller building societies and banks across the UK will be able to achieve a more advanced level of Basel II regulatory compliance thanks to a new managed service launched by Fujitsu Services, one of Europe’s leading providers of managed services for IT infrastructure, in partnership with LINK, operator of the world's busiest ATM network and a leading independent provider of transaction management services to the finance sector. By collaborating with each other, small financial organisations will gain the same benefits of Basel II compliance as larger contenders such as Barclays Bank and the Halifax, including greater reductions in capital reserve requirements, which can be then be re-invested to fund future business growth.
The Basel II Accord is being introduced to regulate the operations and reduce the risk exposure of financial services organisations world-wide. Coming into effect early in 2007, the Basel II regulations can be met at varying levels. However, the more advanced levels of compliance provide the greatest benefits, reducing capital allocation reserves significantly and improving market perception.
There are 49 building societies in the UK with less than £2 billion in assets. Alone, many of these smaller financial organisations have insufficient credit risk data to satisfy the criteria of the more sophisticated compliance approaches – IRB Foundation and IRB Advanced. This restricts their options and means they can only implement the Standardised level of compliance when the new Basel II financial regulations come into effect. Standardised compliance will prevent them from taking advantage of the benefits that will be obtained by their larger competitors.
The managed service offered by Fujitsu and LINK creates the facility for participating financial organisations to collaborate and pool their risk data together in a secure, confidential and anonymous manner. Once the data has been amalgamated, organisations can use it to calculate a more accurate risk measurement, and improve credit decisions and policies through better understanding of the business model risks.
Tom Roche, director of strategy and business development for the finance sector at Fujitsu Services says: “We do not want to see the UK’s smaller banks and building societies disadvantaged as larger rivals around them benefit from the advanced levels of Basel II compliance. This managed service opens up the opportunity for them to keep pace with the larger players in the field, by providing them with a large pool of data to tap into. Working with LINK, who are already a trusted and recognised supplier in the financial sector, this managed service can help small organisations develop stronger business strategies.”
Peter Flynn, general manager at LINK says “Apprehension within the financial services sector has been raised by the FSA’s recent action of contacting all UK building societies requesting their roadmap for Basel II implementation. This independent managed service, in partnership with Fujitsu, allows building societies and banks to achieve the more advanced levels of compliance, reaping the benefits of a reduction in capital reserves by funding future expansion.”
About Fujitsu Services
Fujitsu Services is one of the leading IT services companies in Europe, Middle East and Africa. It has an annual turnover of £1.86 billion (€2.8bn), employs 13,100 people and operates in over 20 countries. It designs, builds and operates IT systems and services for customers in the financial services, telecom, retail, utilities and government markets. Its core strength is the delivery of IT infrastructure management and outsourcing across desktop, networking and data centre environments, together with a full range of related services, from infrastructure consulting through integration and deployment.
Headquartered in London, Fujitsu Services is the European-centred IT services arm of the Fujitsu Group. The Fujitsu Group is a US$38 billion (€35 billion) leader in customer-focused IT systems and services for the global marketplace. Fujitsu Services website: http://uk.fujitsu.com
LINK Interchange Network Ltd provides electronic transaction management services on behalf of the UK's largest financial institutions and other commercial organisations. LINK manages the LINK ATM network, the world's busiest shared ATM network with over 47,000 cash machines deployed and over 95 million LINK-enabled cards in issue. LINK also manages transactions for the basic bank accounts that form part of the Post Office's universal banking services programme and has implemented an ATM prepay top-up service on behalf of mobile phone operators. LINK is pursuing opportunities to use its proven, secure and reliable network infrastructure to support a new generation of transaction management services, including overseas developments. LINK’s website: http://www.link.co.uk
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