Course Outline

1. What is Basel III?

1.1. The Basel III papers
1.2. Was Basel II responsible for the market crisis?
1.3. Introduction to the Basel III Amendments
1.4. The Financial Stability Board (FSB), the G20 and the Basel III framework

2. The New Basel III Principles for risk management and corporate governance

The key areas where the Basel Committee believes the greatest focus is necessary

2.1 Board practices
2.2 Senior management
2.3 Risk management and internal controls
2.4 Compensation
2.5 Complex or opaque corporate structures
2.6 Disclosure and transparency

3. The Quality of Capital

3.1 The numerator: A strict definition of capital
3.2 Limits and Minima
3.3 Common Equity Tier 1
3.4 Common shares issued by the bank
3.5 Additional Tier 1 capital
3.6 Tier 2 capital
3.7 Investments held by banks in capital instruments of other banks and financial and insurance entities
3.8 The corresponding deduction approach and the changes in the business model
3.9 Double Gearing and Basel III
3.10 Securitisation and Resecuritisation

4. The Risk Weighted Assets

4.1 The denominator: Enhanced risk coverage
4.2 Understanding securitization

5. The Capital Ratio

5.1 In addition to the quality of capital and risk coverage
5.2 Calibration
5.3 Transition period

6. Global Liquidity Standards

6.1 Introduction of global minimum liquidity standards
6.2 The Liquidity Coverage Ratio (LCR) that makes banks more resilient to potential short-term disruptions
6.3 Stock of high-quality liquid assets
6.4 Total net cash outflows
6.5 The Net Stable Funding Ratio (NSFR) that addresses longer-term structural liquidity mismatches
6.6 Available stable funding (ASF)
6.7 Required stable funding (RSF)
6.8 Contractual maturity mismatch
6.9 Concentration of funding
6.10 Available unencumbered assets
6.11 LCR by significant currency
6.12 Market-related monitoring tools
6.13 Transitional arrangements

7. Capital Conservation

7.1 Distribution policies that are inconsistent with sound capital conservation principles
7.2 Supervisors enforce capital conservation discipline

8. Leverage Ratio

8.1 Strong Tier 1 risk based ratios with high levels of on and off balance sheet leverage
8.2 Simple, non-risk-based leverage ratio
8.3 Introducing additional safeguards against model risk and measurement error
8.4 Calculation of the leverage ratio

9. Countercyclical Capital Buffer

9.1 Procyclical or Countercyclical?
9.2 The new countercyclical capital buffer
9.3 Home / Host Challenges
9.4 Guidance for national authorities operating the countercyclical capital buffer
9.5 Principles underpinning the role of judgement
9.6 Principle 1: (Objectives)
9.7 Principle 2: (Common reference guide)
9.8 Principle 3: (Risk of misleading signals)
9.9 Principle 4: (Prompt release)
9.10 Principle 5: (Other macroprudential tools)
9.11 Jurisdictional reciprocity
9.12 Frequency of buffer decisions and communications
9.13 Treatment of surplus when buffer returns to zero

10. Systemically Important Financial Institutions (SIFIs)

10.1 SIFIs and G-SIFIs
10.2 Improvements to resolution regimes
10.3 Additional loss absorption capacity
10.4 More intensive supervisory oversight
10.5 Stronger robustness standards
10.6 Peer review
10.7 Developments at the national and regional level
10.8 The Financial Stability Oversight Council (FSOC)
10.9 The European Systemic Risk Board (ESRB)
10.10 Strengthening SIFI supervision

11. Systemically Important Markets and Infrastructures (SIMIs)

11.1 The Basel Committee and Financial Stability Board endorse central clearing and trade reporting on OTC derivatives
11.2 Derivative counterparty credit exposures to central counterparty clearing houses (CCPs)
12. Risk Modelling, Stress Testing and Scenario Analysis
12.1 Capture of systemic risk/tail events in stress testing and risk modelling
12.2 VaR shortcomings: the normality assumption
12.3 Need for a strong stress testing programme
12.4 Systemic risk capture in banks’ risk models

13. Pillar 2 Amendments: Stress testing)

13.1 Pillar 2 Amendments: Stress testing
13.2 Principles for sound stress testing practices and supervision
13.3 15 stress testing principles for banks
13.4 Firm-wide stress testing
13.5 6 stress testing principles for supervisors

14. The Impact of Basel III

14.1 The Impact of Basel III
14.2 Investment Banking, Corporate Banking, Retail Banking
14.3 Investment banks are primarily affected, particularly in trading and securitization businesses
14.4 The new capital rules have a substantial impact on profitability
14.5 Basel III Impact on Regional Banks
14.6 Basel III Impact on Pillar 2
14.7 Basel III effect on financial sector
14.8 Basel III implications for bank risk management
14.9 Implications for European Systemic Risk Board
14.10 Impact of Basel III for commercial banks?
14.11 Basel III implications for indigenous banks
14.12 Can regional banks mitigate Basel III impacts?
14.13 Other Implications of Basel III
14.14 Areas of Focus

15. Conclusions

16. Examples (Case Studies)

Basel III Capital Structure
A worked example of a bank
Basel III – explanation of changes
Basel III Capital Structure

 21 Hours

Number of participants

Price per participant

Testimonials (2)

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