The report exposes wide variation in the implementation of Pillar 2 across the region, along with the perceived degree of influence by regulators on core bank management processes. From its inception, Pillar 2 has incorporated a degree of flexibility, given the one size fits all model was considered neither practical nor necessary at the time. However, as a result, the divergence of approach highlights the need for some considerable work to be done if Basel III is to be implemented on a level playing field.
This is a really strong report that has good points of view and should be helpful in debating the current challenges clients are facing around the Basel II ICAAP's – but also should be used to set up discussions about readiness for Basel III.