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Banks face extra US$8 bln of IT costs for risk control: study
[LONDON] Banks are likely to spend more than US$8 billion in the next six years to improve technology platforms to meet demands to beef up how they manage and report risks, according a research paper published on Monday by technology services firm Sungard.
The extra spending by banks is likely to peak at US$2 billion in 2017, said the paper, which looked at on how banks will adapt to demands by regulators to improve the collection and reporting of risk data.
The Basel Committee on Banking Supervision (BCBS) last year said many banks lacked the ability to properly assess risk exposures during the 2007/09 financial crisis and must improve.
It set out higher standards that 30 global, systemically important banks must meet from 2016. Smaller, nationally important banks also have to comply but will have longer to do so.
The extra costs of improving systems was likely to amount to at least 50-100 million euros for an average bank and most of the extra costs will be incurred by the smaller banks, Sungard said. It said some of the extra spending in its forecast will be by the major insurance companies.