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CAPITAL ADEQUACY
Can we Achieve Effective Regulation and still let Banks be Banks?
With Apologies to Alfred, Lord Tennyson
Not that the banker knew
Some one had utter’d:
Their’s not to make reply,
Their’s not to reason why,
Their’s but to FOLLOW and die:
Into North Colonnade
Rode the six hundred.
Regulators to right of them,
Risk managers to left of them,
Directors in front of them”
“Half a year, half a year,
Half a year onward,
Down to Canary Wharf (2)
Rode the six hundred (3)
‘Forward the Basel Brigade!
Charge for the PRA!’ he said:
Into North Colonnade
Rode the six hundred
‘Forward the Basel Brigade!’
Was there a many dismay’d?
The Charge of the Basel Brigade
3
Trade Finance – Leverage Ratio
300
20
90
210
100
75
350
150
125
144
26 Capital
Assets Liabilities
795 795
Items
Off Balance
150
26
795
= 3.3%
Leverage Ratio
26
945
= 2.75%
Leverage Ratio
XCCF100%=
150
300
20
90
360
100
75
425
225
125
144
26 Capital
945 945
Assets Liabilities
Items
Off Balance
150
26
825
= 3.15%
Leverage Ratio
XCCF20%=
30
300
20
90
240
100
75
365
165
125
144
26 Capital
825 825
Assets Liabilities
4
Effective Regulation
5
RSA - The good times are over?
All the good times have past and gone
All the good times are over
All the good times have past and gone
Little darlin', don't you weep no more
I wish to the Lord I'd never been born
The time when I was young
I never would've seen her smiling face
Or heard her lying tongue
Oh, don't you see that lonesome dove
That flies from pine to pine?
He's searchin' for his own, his own true love
Just like I search for mine
Come back, come back, my own true love
And stay a while with me
If ever I've had a friend in this world
You've been a friend to me
All the good times have past and gone
All the good times are over
All the good times have past and gone
Little darlin', don't you weep no more
6
Reducing variation in Credit Risk RWA – Apocalypse averted

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ICC BANKING COMMISSION JAKARTA 2017: Day 1(wed 5 April) 14h40: Capital Adequacy: Can We Achieve Effective Regulation and Still Let Banks be Banks?

  • 1. CAPITAL ADEQUACY Can we Achieve Effective Regulation and still let Banks be Banks?
  • 2. With Apologies to Alfred, Lord Tennyson Not that the banker knew Some one had utter’d: Their’s not to make reply, Their’s not to reason why, Their’s but to FOLLOW and die: Into North Colonnade Rode the six hundred. Regulators to right of them, Risk managers to left of them, Directors in front of them” “Half a year, half a year, Half a year onward, Down to Canary Wharf (2) Rode the six hundred (3) ‘Forward the Basel Brigade! Charge for the PRA!’ he said: Into North Colonnade Rode the six hundred ‘Forward the Basel Brigade!’ Was there a many dismay’d? The Charge of the Basel Brigade
  • 3. 3 Trade Finance – Leverage Ratio 300 20 90 210 100 75 350 150 125 144 26 Capital Assets Liabilities 795 795 Items Off Balance 150 26 795 = 3.3% Leverage Ratio 26 945 = 2.75% Leverage Ratio XCCF100%= 150 300 20 90 360 100 75 425 225 125 144 26 Capital 945 945 Assets Liabilities Items Off Balance 150 26 825 = 3.15% Leverage Ratio XCCF20%= 30 300 20 90 240 100 75 365 165 125 144 26 Capital 825 825 Assets Liabilities
  • 5. 5 RSA - The good times are over? All the good times have past and gone All the good times are over All the good times have past and gone Little darlin', don't you weep no more I wish to the Lord I'd never been born The time when I was young I never would've seen her smiling face Or heard her lying tongue Oh, don't you see that lonesome dove That flies from pine to pine? He's searchin' for his own, his own true love Just like I search for mine Come back, come back, my own true love And stay a while with me If ever I've had a friend in this world You've been a friend to me All the good times have past and gone All the good times are over All the good times have past and gone Little darlin', don't you weep no more
  • 6. 6 Reducing variation in Credit Risk RWA – Apocalypse averted