Country folk lead Europe to IRB status
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"Basle II is all about changing the way that people run their businesses. We can’t do that for people" |
"Their success is inspirational," says Adrian Coles, director-general of the Building Societies Association, the trade body that represents the UK’s 59 societies. "N&P have done brilliantly to get there first, but I think there are as many as 15 other societies seeking to get their own IRB approval also. They will be encouraged by what N&P has done and will go for it even more."
Some of these other building societies are building their internal models on a stand-alone basis, as N&P did – using their own data and their own expertise. One of these – Coventry Building Society – announced on July 27 that its application had been approved. The UK’s biggest building society, Nationwide, is expected to win approval soon. Others lack the depth of data required to model credit risk robustly but don’t want to get left behind. Nine building societies that fall into this category have decided to join forces, pooling their data in order to achieve the critical mass of losses data necessary to satisfy the Financial Services Authority.