MANILA, Philippines -- More than compliance with new regulations, Philippine banks stand to benefit from the adoption of International Accounting Standards (IAS) 39, which mandates them to recognize and measure derivatives trades.

Allaying fears that such move could lead to capital erosion for banks, Misys managing director Graeme Beardsell said IAS 39 even presents an opportunity for local industry players to more efficiently identify and manage their risk operations.

?Compliance with IAS 39 could be a catalyst to looking at the next generation of solutions that give you greater business value,? Beardsell said.

The operative phrase, however, is ?finding the right solutions.? Dr. Tat Fung, New York-based head of quantitative & financial engineering for Misys Solutions, said the shift to IAS 39 is not only ?accounting-intensive? but also ?IT-intensive.?

There is a tendency for most banks to just focus on the accounting risk and the complex bookkeeping processes involved in converting to IAS instead of getting the right solution that will identify the exact risks.

As the conversion process requires tedious documentation and data analysis, some banks find it burdensome and expensive to adopt the globally accepted financial reporting standards. Tat said there are even some US banks that resorted to hiring thousands of consultants to do the work.

?Some banks look at the shift to become IAS 39-compliant as an extremely challenging and costly overhaul of their existing financial reporting procedure they have ever undertaken when it need not be,? he said.

With the right solutions, moving to IAS 39 could give banks enough competitive boost in their business while bringing about greater transparency in the financial system, said the Misys financial engineer.

Misys, a global software and solutions company, is one of the world's largest and established providers of industry-specific software. With over 1,000 customers in 72 countries, including the biggest banks in the Philippines, the company?s specialist treasury and capital markets team offers the data warehousing and financial services solutions expertise that banks need to be IAS 39-compliant.

The adoption of IAS is expected to attract inflows of foreign investments into the Philippines and support the development of capital markets by increasing the use of more hedging instruments.

The Bangko Sentral ng Pilipinas, the country?s central bank, initially required local banks to adopt IAS 39 but was forced to delay the deadline after banks sought longer time to adjust their system with stricter accounting standards.