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By Sonya Rabbitte, 2 August 2001 13:45

NEWS UK banks are on course to miss a 2005 deadline on an international banking directive because they are failing to implement the necessary IT systems. Just 63 per cent of UK banks have begun work on essential data mining projects required under the Basel Accord, compared with up to 100 per cent of respondents in several European countries, according to a report from KPMG. The UK was the only country out of 13 surveyed to rate the cost of compliance as the biggest obstacle to implementation. The Basel Accord upgrades current rulings on credit and operational risk safeguards for banks in the US, Canada and 12 European countries. The new ruling will require banks to provide complex information on credit history performance, requiring many institutions to update or implement new data mining systems. Karen Bloomfield, senior manager of regulatory services with KPMG, warned that UK banks need to start implementing projects now if they are to meet the complex conditions of the 2005 deadline. She told silicon.com: "Banks need to work out their approach right now, not coming up to 2005. Up to seven years of data is required in some cases, and if they haven't been accumulating it until now they could run into problems." While no price tag has been put on the project, Bloomfield says the cost of new systems could verge on Y2K proportions. That ran into hundreds of billions of dollars worldwide. "It's impossible to predict the cost, but potentially it's huge, it could be bigger than Y2K," she said. Peter Beard, VP of Sales at Whitelight, an analytics company working with banks such as ING, Dresdner and Barclays, said banks have a tough job ahead of them. He said: "A lot of banks have grown through acquisition so they're working on a number of different legacy systems. No one is suggesting they trash their old systems but they do need to adopt a consistent approach to data and that's going to be a monumental task."