Basel III, albeit delayed, is set to change the banking landscape. More capital and greater liquidity will change the way banks do business in the future. More interestingly, Basel III could well lead a change in the financial services landscape globally. A "Shadow Banking Sector" is already a reality and Basel III opens up significant opportunities for capital rich emerging market banks.
This is a first in a series of presentations exploring Basel III, its impact on the global banking sector and most importantly possible response strategies banks could adopt to gain competitive advantage.
Basel III, albeit delayed, is set to change the banking landscape. More capital and greater liquidity will change the way banks do business in the future. More interestingly, Basel III could well lead a change in the financial services landscape globally. A "Shadow Banking Sector" is already a reality and Basel III opens up significant opportunities for capital rich emerging market banks.
This is a first in a series of presentations exploring Basel III, its impact on the global banking sector and most importantly possible response strategies banks could adopt to gain competitive advantage.
Basel iii Compliance Professionals Association (BiiiCPA) - Part ACompliance LLC
Certified Basel iii Professional (CBiiiPro)
Objectives: The seminar has been designed to provide with the knowledge and skills needed to understand the new Basel III framework and to work in Basel III Projects.
Target Audience: This course is intended for managers and professionals working in Banks, Financial Organizations, Financial Groups and Financial Conglomerates who need to understand the new Basel III requirements, challenges and opportunities. It is also intended for management consultants, vendors, suppliers and service providers working for financial organizations.
This course is highly recommended for:
- Managers and Professionals involved in Basel III (decision making and implementation)
- Risk and Compliance Officers
- Auditors
- IT Professionals
- Strategic Planners
- Analysts
- Legal Counsels
- Process Owners
Basel III timelines extend for almost another decade. So, if you don’t
know Basel III, you will be out of conversation for next many years
Live web based training provided by Basel experts.
A set of international banking regulations put forth by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
Basel iii Compliance Professionals Association (BiiiCPA) - Part ACompliance LLC
Certified Basel iii Professional (CBiiiPro)
Objectives: The seminar has been designed to provide with the knowledge and skills needed to understand the new Basel III framework and to work in Basel III Projects.
Target Audience: This course is intended for managers and professionals working in Banks, Financial Organizations, Financial Groups and Financial Conglomerates who need to understand the new Basel III requirements, challenges and opportunities. It is also intended for management consultants, vendors, suppliers and service providers working for financial organizations.
This course is highly recommended for:
- Managers and Professionals involved in Basel III (decision making and implementation)
- Risk and Compliance Officers
- Auditors
- IT Professionals
- Strategic Planners
- Analysts
- Legal Counsels
- Process Owners
Basel III timelines extend for almost another decade. So, if you don’t
know Basel III, you will be out of conversation for next many years
Live web based training provided by Basel experts.
A set of international banking regulations put forth by the Basel Committee on Bank Supervision, which set out the minimum capital requirements of financial institutions with the goal of minimizing credit risk. Banks that operate internationally are required to maintain a minimum amount (8%) of capital based on a percent of risk-weighted assets.
Liquidity Risk is normally a crucial issue in a banking crisis, however, during the 2007-2010 period, Liquidity has not been as difficult for us as we may have thought. There are many reasons for this, but number one is the fact that today’s community bankers simply have a better understanding of the various techniques for raising both retail deposits and wholesale funds. What does make this crisis a bit different is the relative pricing efficiencies in the wholesale or non-core funding arena these days and our session will focus on how bankers can avoid those difficult examiner discussions about the use of FHLB Advances and Brokered Deposits. It’s all about process and we will provide guidance on what needs to be in your ALCO Policy as it relates to wholesale funding. We will also explore the April 2010 Liquidity and Funds Management Guidance to ensure your bank is up to speed on those requirements. Finally, we will provide specific guidance on both Ratio Analysis and creating your Contingency Funding Plan and will review a sample CFP.
Operational Risk Management Under Basel II & Basel IIIEneni Oduwole
In this introductory presentation on the subject, salient features that changed in approaches adopted for Operational Risk Management under Basel I and Basel I were highlighted.
In the backdrop of the financial crisis of 2008, BCBS has instituted a framework to ensure ability of banks and their respective supervisors to manage company and industry risks by leveraging data and to ensure a more robust data capabilities and mechanisms to support: (1) Decision Making, (2) Strategy Formulation, and (3) Reporting
How Cognizant's ZDLC solution is helping Data Lineage for compliance to Basel...Dr. Bippin Makoond
A solution powered by Cognizant ZDLC framework to accelerate the process of data extraction and improve the precision of the end to end data lineage of systems using automation techniques.
A solution designed for the BCBS 239 Initiative.
Alignment: Office of the Chief Data Officer & BCBS 239Craig Milroy
Alignment: Office of the Chief Data Officer & BCBS 239. Alignment overview between OCDO framework and Principles for Effective Risk Data Aggregation and Risk Reporting.
The Top Skills That Can Get You Hired in 2017LinkedIn
We analyzed all the recruiting activity on LinkedIn this year and identified the Top Skills employers seek. Starting Oct 24, learn these skills and much more for free during the Week of Learning.
#AlwaysBeLearning https://learning.linkedin.com/week-of-learning
CREATING AN AGILE BANCASSURANCE PLATFORMAjay Kukreja
Highlights of 4th annual Bancassurance Conference held in Vienna, Austria. An amazing presentation by Kalpesh Desai, CEO Agile Financial - Creating an Agile Bancassurance Platform
Infosys commissioned an independent market research company, Vanson Bourne, to investigate the use of digital technologies and key trends in nine industries. We surveyed 1,000 senior decision makers from business and IT, from large organizations with 1,000 employees or more and annual revenue of at least US$500 million.
The report aims to discover:
a) the surging tide of digital technology adoption in organizations – what is used and where?
b) the promised land of digital technology use, and the hurdles organizations face to get there
c) the biggest disruptive digital trends within the next three years and why organizations see them as vital to future success
The summary here presents the survey results and highlights the digital outlook that will define the healthcare industry strategy over the next three years.
5 tips to make your mainframe as fit as youInfosys
Just like a periodic health check-up is important to assess your overall well-being, a detailed reexamination of the enterprise IT landscape is paramount. We take a look at the various ways an enterprise needs to revamp its mainframe and sharpen its functionalities to stay ahead of the game. While APIs aid you in providing superior customer service, migrating to the cloud provides you with scalability and resilience. These and many more sub-offerings from Infosys aid your organization in staying agile and equipped to leverage the latest technologies to cater to the ever-changing market. Learn more.
Human Amplification In The Enterprise - Resources and UtilitiesInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Resources and Utilities.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human Amplification In The Enterprise - Telecom and CommunicationInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Telecom and Communication.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human Amplification In The Enterprise - Retail and CPGInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Retail and CPG.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human Amplification In The Enterprise - Manufacturing and High-techInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Manufacturing and High-tech.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human amplification in the enterprise - Automation. Innovation. Learning.Infosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Automation, Innovation and learning.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human Amplification In The Enterprise - Healthcare and Life SciencesInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Healthcare and Life Sciences
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Human Amplification In The Enterprise - Banking and InsuranceInfosys
Infosys commissioned a study to develop a research methodology and get insights into the current nature of digital transformation enterprises undergo, across industry verticals. This deck provides industry specific insights from Banking and Insurance.
The study sought to understand a) the specific drivers of digital transformation for enterprises, b) the various facets of this transformation, c) expected and ensuing outcomes, and d) the role of Artificial Intelligence (AI).
Take a glimpse at few of our efforts that we made to demonstrate that efficient technologies can easily be deployed in large scale in a cost effective manner to make our campus environmental friendly on this World Environment Day 2015
The Information Services industry is in the eye of the digital storm. Two major contenders within this industry - traditional and new age media companies must adopt strategies for the significant mass of millennials and demanding consumers.
The secret way to sell pi coins effortlessly.DOT TECH
Well as we all know pi isn't launched yet. But you can still sell your pi coins effortlessly because some whales in China are interested in holding massive pi coins. And they are willing to pay good money for it. If you are interested in selling I will leave a contact for you. Just telegram this number below. I sold about 3000 pi coins to him and he paid me immediately.
Telegram: @Pi_vendor_247
how to sell pi coins in South Korea profitably.DOT TECH
Yes. You can sell your pi network coins in South Korea or any other country, by finding a verified pi merchant
What is a verified pi merchant?
Since pi network is not launched yet on any exchange, the only way you can sell pi coins is by selling to a verified pi merchant, and this is because pi network is not launched yet on any exchange and no pre-sale or ico offerings Is done on pi.
Since there is no pre-sale, the only way exchanges can get pi is by buying from miners. So a pi merchant facilitates these transactions by acting as a bridge for both transactions.
How can i find a pi vendor/merchant?
Well for those who haven't traded with a pi merchant or who don't already have one. I will leave the telegram id of my personal pi merchant who i trade pi with.
Tele gram: @Pi_vendor_247
#pi #sell #nigeria #pinetwork #picoins #sellpi #Nigerian #tradepi #pinetworkcoins #sellmypi
Turin Startup Ecosystem 2024 - Ricerca sulle Startup e il Sistema dell'Innov...Quotidiano Piemontese
Turin Startup Ecosystem 2024
Una ricerca de il Club degli Investitori, in collaborazione con ToTeM Torino Tech Map e con il supporto della ESCP Business School e di Growth Capital
Even tho Pi network is not listed on any exchange yet.
Buying/Selling or investing in pi network coins is highly possible through the help of vendors. You can buy from vendors[ buy directly from the pi network miners and resell it]. I will leave the telegram contact of my personal vendor.
@Pi_vendor_247
what is the future of Pi Network currency.DOT TECH
The future of the Pi cryptocurrency is uncertain, and its success will depend on several factors. Pi is a relatively new cryptocurrency that aims to be user-friendly and accessible to a wide audience. Here are a few key considerations for its future:
Message: @Pi_vendor_247 on telegram if u want to sell PI COINS.
1. Mainnet Launch: As of my last knowledge update in January 2022, Pi was still in the testnet phase. Its success will depend on a successful transition to a mainnet, where actual transactions can take place.
2. User Adoption: Pi's success will be closely tied to user adoption. The more users who join the network and actively participate, the stronger the ecosystem can become.
3. Utility and Use Cases: For a cryptocurrency to thrive, it must offer utility and practical use cases. The Pi team has talked about various applications, including peer-to-peer transactions, smart contracts, and more. The development and implementation of these features will be essential.
4. Regulatory Environment: The regulatory environment for cryptocurrencies is evolving globally. How Pi navigates and complies with regulations in various jurisdictions will significantly impact its future.
5. Technology Development: The Pi network must continue to develop and improve its technology, security, and scalability to compete with established cryptocurrencies.
6. Community Engagement: The Pi community plays a critical role in its future. Engaged users can help build trust and grow the network.
7. Monetization and Sustainability: The Pi team's monetization strategy, such as fees, partnerships, or other revenue sources, will affect its long-term sustainability.
It's essential to approach Pi or any new cryptocurrency with caution and conduct due diligence. Cryptocurrency investments involve risks, and potential rewards can be uncertain. The success and future of Pi will depend on the collective efforts of its team, community, and the broader cryptocurrency market dynamics. It's advisable to stay updated on Pi's development and follow any updates from the official Pi Network website or announcements from the team.
how can I sell pi coins after successfully completing KYCDOT TECH
Pi coins is not launched yet in any exchange 💱 this means it's not swappable, the current pi displaying on coin market cap is the iou version of pi. And you can learn all about that on my previous post.
RIGHT NOW THE ONLY WAY you can sell pi coins is through verified pi merchants. A pi merchant is someone who buys pi coins and resell them to exchanges and crypto whales. Looking forward to hold massive quantities of pi coins before the mainnet launch.
This is because pi network is not doing any pre-sale or ico offerings, the only way to get my coins is from buying from miners. So a merchant facilitates the transactions between the miners and these exchanges holding pi.
I and my friends has sold more than 6000 pi coins successfully with this method. I will be happy to share the contact of my personal pi merchant. The one i trade with, if you have your own merchant you can trade with them. For those who are new.
Message: @Pi_vendor_247 on telegram.
I wouldn't advise you selling all percentage of the pi coins. Leave at least a before so its a win win during open mainnet. Have a nice day pioneers ♥️
#kyc #mainnet #picoins #pi #sellpi #piwallet
#pinetwork
Falcon stands out as a top-tier P2P Invoice Discounting platform in India, bridging esteemed blue-chip companies and eager investors. Our goal is to transform the investment landscape in India by establishing a comprehensive destination for borrowers and investors with diverse profiles and needs, all while minimizing risk. What sets Falcon apart is the elimination of intermediaries such as commercial banks and depository institutions, allowing investors to enjoy higher yields.
Empowering the Unbanked: The Vital Role of NBFCs in Promoting Financial Inclu...Vighnesh Shashtri
In India, financial inclusion remains a critical challenge, with a significant portion of the population still unbanked. Non-Banking Financial Companies (NBFCs) have emerged as key players in bridging this gap by providing financial services to those often overlooked by traditional banking institutions. This article delves into how NBFCs are fostering financial inclusion and empowering the unbanked.
What price will pi network be listed on exchangesDOT TECH
The rate at which pi will be listed is practically unknown. But due to speculations surrounding it the predicted rate is tends to be from 30$ — 50$.
So if you are interested in selling your pi network coins at a high rate tho. Or you can't wait till the mainnet launch in 2026. You can easily trade your pi coins with a merchant.
A merchant is someone who buys pi coins from miners and resell them to Investors looking forward to hold massive quantities till mainnet launch.
I will leave the telegram contact of my personal pi vendor to trade with.
@Pi_vendor_247
when will pi network coin be available on crypto exchange.DOT TECH
There is no set date for when Pi coins will enter the market.
However, the developers are working hard to get them released as soon as possible.
Once they are available, users will be able to exchange other cryptocurrencies for Pi coins on designated exchanges.
But for now the only way to sell your pi coins is through verified pi vendor.
Here is the telegram contact of my personal pi vendor
@Pi_vendor_247
If you are looking for a pi coin investor. Then look no further because I have the right one he is a pi vendor (he buy and resell to whales in China). I met him on a crypto conference and ever since I and my friends have sold more than 10k pi coins to him And he bought all and still want more. I will drop his telegram handle below just send him a message.
@Pi_vendor_247
1. White Paper
Basel II to Basel III – The Way forward
- Rohit VM, Sudarsan Kumar, Jitendra Kumar
Abstract
Basel III guidelines are the response of BCBS (Basel Committee on Banking Supervision) to the 2008 Crisis. It is aimed at
strengthening Individual Financial Institutions as well as the overall Financial System by eliminating the weaknesses which
were present in BASEL II that were revealed during the crisis.
BASEL III has a multi-dimensional impact on financial Institutions and will require associated changes to the IT systems.
This paper covers various BASEL III guidelines, and describes the “Why” and “How” different areas of IT infrastructure and
systems will be impacted.
www.infosys.com
2. Introduction
Some very fundamental assumptions by financial institutions and regulators were proven wrong during the 2008 Crisis. The business
of subprime lending was based on the assumption that housing prices would keep going up. This assumption proved wrong and it
triggered a chain reaction that engulfed the global financial system. This ‘crisis cycle’ is illustrated in the diagram below.
There were some incentives present in the financial system that encouraged risk taking. Transferring of risk through securitization; relying on
credit ratings provided by credit rating agencies, which were paid for by the issuers; compensation of top management based on absolute
growth, revenue and profit rather than risk adjusted profitability; were just some of the reasons that encouraged excessive risk taking by banks.
When subprime loan defaults started impacting the balance sheets of financial institutions, it became a systemic problem. Quarterly
losses to the tune of billions of dollars by major Financial Institutions resulted in a crisis of confidence that sucked out liquidity from the
financial system. At this time, the weaknesses of the BASEL II guidelines became very evident.
Exposure to risky assets in the form of subprime loans, securitization and derivatives resulted in excessive losses. The low quality and
quantity of capital could not absorb these losses when systemic risk materialized. The bank’s loss absorbing capacity was affected
because of their excessive leverage and their short term sources of funding made financial institutions gasping for capital when it was
most difficult to raise capital.
Sub-Prime Sub-prime defaults, Excessive leverage &
Lending Housing prices Securitized assets & poor capital could not
decline resulting in derivatives trading absorb losses fully,
sub-prime defaults resulted in huge demanding fresh
Securitization losses equity infusion
Excessive Risk Taking In stressed market situations, Credit
Rating downgrades of Financial
Institutions & securitized products
further lowered valuations &
increased losses
Governments step in Firms on the verge of Short term borrowing Huge losses resulted
to inject capital to insolvency; demanded fresh in a crisis of
prevent systemic threatening system borrowing which confidence causing
failure failure failed in liquidity crisis liquidity to evaporate
BASEL III attempts to plug the loopholes present in BASEL II by recommending steps to further strengthen the overall financial system. BASEL
III requires higher risk weights for risky assets bringing more assets/exposure into the umbrella of Risk Weighted Asset (RWA) calculations,
prescribes a higher regulatory capital requirement and demands a very high quality of capital. It also introduces requirements to manage
liquidity risk better. Finally, it introduces an additional requirement of absolute leverage ratio to take into consideration the model error
which might be present in RWA calculations.
2 | Infosys – White Paper
3. The diagram below highlights where and how BASEL III changes will address the deficiencies in the ‘crisis cycle’.
• Higher quantity & quality of
Capital Conservation / • Less reliance on external
capital
Counter-cyclical buffers ratings agencies
• Leverage Ratio introduced
• CVA Capital Charge
• 100% weight for trade finance
• Stressed Testing
Sub-Prime Sub-prime defaults, Excessive leverage &
Lending Housing prices Securitized assets & poor capital could not
decline resulting in derivatives trading absorb losses fully,
sub-prime defaults resulted in huge demanding fresh
Securitization losses equity infusion
In stressed market situations,
Excessive Risk Taking Credit Rating downgrades of
Correlation to financial institutions
Financial Institutions &
will carry more risk weights – to
prevent systemic risks and an securitized products further
overall collapse lowered valuations &
increased losses
Governments step in Firms on the verge of Short term borrowing Huge losses resulted
to inject capital to insolvency; demanded fresh in a crisis of
prevent systemic threatening system borrowing which confidence causing
failure failure failed in liquidity crisis liquidity to evaporate
Enhanced Supervisory Two new liquidity
Review and Disclosure ratios
In summary, the BASEL III rules will strengthen the capital reserves and introduce stringent reporting requirements that cover key risk, liquidity and
leverage parameters. The BASEL III guidelines also attempt to bolster the weak links in the financial system with the introduction of Central Clearing
Houses and lessen the dependency on Rating Agencies. The chart below captures the key aspects of the BASEL III guidelines that have been introduced.
• Increase in common equity requirement from 2% to 4.5%
• Increase in Tier 1 Capital (Going Concern) from 4% to 6%
CAPITAL
• Overall capital will remain the same at 8%. (Which means Tier 2 capital, or gone concern capital to reduce to 2% of
total capital)
• Tier 1 Capital can no longer include hybrid capital instruments with an incentive to redeem through features such as
step-up clauses. These will be phased out
• Tier 3 Capital will be eliminated (previously used for market risk)
CAPITAL -
• Introduction of Capital Conservation Buffer - 2.5% of Common Equity Tier 1
BUFFERS
• Introduction of Counter Cyclical Buffer - 0 to 2.5% of Risk Weighted Assets (RWA)
• Credit Valuation Adjustment (CVA) Capital Charge must be calculated to cover Mark-to-Market losses on counterparty
risk to Over The Counter (OTC) Derivatives.
RISK • Stressed parametes must be used to calculate Counterparty Credit Risk
MANAGEMENT • Effective Expected Positive Exposure (EPE) with stressed parameters to be used to address general Wrong-Way Risk
(WWR) and Counterparty Credit Risk
• Banks must ensure complete trade capture and exposure aggregation across all forms of counterparty credit risk (not
just OTC derivatives) at the counterparty-specific level in a sufficient time frame to conduct regular stress testing.
• A multiplier of 1.25 is applied to the corelation parameter of all exposures to financial institutions (meeting certain
criteria) (Asset Value Correlation - AVC)
• Additional margining required for illiquid derivative exposures
• 100% risk weight for Trade finance
Infosys – White Paper | 3
4. LIQUIDITY • Liquidity Coverage Ratio (LCR) >= 100%
• Net Stable Funding Ratio (NSFR) > 100%
LEVERAGE
• Leverage Ratio >= 3%
• Contractual maturity mismatch
REPORTING • Concentration of funding
• Available unencumbered assets
• Market-related monitoring tools: asset prices and liquidity, Credit Default Swap (CDS) spreads and equity prices
• LCR by currency
• Results of stress tests should be integrated into regular reporting to senior management
RATING
AGENCIES • Lower reliance on External Rating Agencies
Basel III –New Requirements
IT Impact – Summary of Change
The architecture below represents
New Sources of Data Updated Models will incorporate RWA Calculation will change
a typical BASEL II set-up. Exposure new sources of capital (new data because of the new data
(Cash Flows) required to
and reference data information calculate LCR/NSFR. fields) and stressed parameters fields and new risk weights
is extracted from multiple source
systems through Extract, Transform Data Sources ETL Staging Basel II Risk Environment RWA Calculation and Reporting
& Load (ETL) processes and the
Origination
modelling parameters – Probability System
Risk
of Default (PD), Exposure at Default Datamarts
(EAD) and Loss Given Default (LGD) Servicing
System
G/L Reconciliation RWA Calculator
are calculated. This data is stored
in a Risk Data-Warehouse and then Factor Model Environment
Source System Extracts
Collateral
Mgmt .
Data Quality/CDC
Reporting Tool
the RWA calculations are performed System
Staging/ODS
Segment
Definition
on the risk data to calculate the Loss &
Recovery PD, LGD,
regulatory capital requirements. System EAD
FFIEC 101
Reports
In general, a BASEL III implementation Reference Op Risk
Models
Data
ICAAP
will require additional source Reports
systems to be included, changes External
Model Validation/ Feedback
Sources
to the data elements of existing Management
Reports
source systems to be made, changes Model Execution and Output
to the risk data models to be done, General
Ledger
RWA calculations and reporting Data Governance
modules to comply with regulatory
reporting guidelines. These changes Data Governance across the system
are highlighted in the pictorial
representation in the diagram. New Reports 6. Market-related monitoring tools: asset
Possible new Data marts to hold 1. LSR, NSFR prices and liquidity, CDS spreads, equity
data for the measurement of 2. Leverage prices, institution specific information
Liquidity and Leverage ratios 3. Contractual maturity mismatch related to the ability of the institution to
4. Concentration of funding fund itself in various wholesale markets
5. Available unencumbered assets 7. LCR by currency
4 | Infosys – White Paper
5. BASEL III’s IT impact can be further understood by looking at its impact on each of the areas separately. The table below lists the impact
expected in different areas of implementation and also lists some of the challenges that will be encountered while implementing them.
Infrastructure Risk
Risk Data RWA Regulatory
and Data Modeling and
Identification Calculation Reporting
Management Quantification
Some new sources • The new liquidity • The formulas used • Changes will be • The reporting
of data that would ratios that Basel III in the calculation required at the systems will have
need to interact with introduces (LCR and of PD, LGD, EAD will risk engines to to be enhanced to
the Basel framework NSFR), will entail change due to the accommodate the cater to the new
include: the creation of need to incorporate new buffers (Counter reports mentioned
• Asset Liability new Liquidity Risk stressed parameters Cyclical, Capital in Basel III
Management (ALM) Data Marts to hold and to also reflect Conservation).
• The existing reports
systems relevant Data a higher EAD value
• It will also need will also be modified
for counterparties
• Cash Flow • Use of Stressed to accommodate to reflect liquidity,
where specific
IMPACT
Management parameters as well the new Risk leverage and CVA,
Wrong Way Risk
systems as calculating CVA Weights assigned besides the new
(WWR) has been
• Existing Liquidity for counterparty to derivatives, trade capital structure
identified.
Risk Management credit risks will need finance products
• Subsidiary reporting
systems huge amounts of as well as account
requirements will be
historical data, which for exposures to
• Data from Central augmented.
may require the use financial institutions.
Counterparties for
of new data marts/
data related to Over-
databases to store
The-Counter (OTC)
such information.
derivatives.
• Identifying the right • A single data • Consultants having • The system should • Understanding
Data Elements. This load with all the experience in be configured to the new reporting
would require a attributes required Stress Testing, provide Group Data, requirements
good knowledge of for market, CCR, Analytics, and Solo Data, Basel I,
• Bringing out
accounting systems RWA, economic general knowledge II and III data on
CHALLENGES
synergies across
as well as knowledge capital and liquidity about the business demand.
stakeholders and
of the various risk should be of Banks will be
consolidating the
reports required by extracted from required to identify
reporting platform.
Basel III. source systems. and stress the
• Identifying required parameters.
• As a result, DQ
sources and data checks will be • Model validation
requirements for rigorous. should be a focus
different legislations. area.
DATA GOVERNANCE
• Put in place a rigorous and scalable Data Governance framework (People + Process + Technology)
• Align source systems’ data quality capabilities to meet Fit For Purpose norms
• End-to-end audit capability from source system data to final output calculation may be a challenge in Basel III because of the many
new source systems interacting with the reporting systems.
Infosys – White Paper | 5
6. BASEL III Implementation Approach
A BASEL III Implementation will require a core team to co-ordinate with multiple track owners who would be responsible for making changes
to the applications and systems that they manage. Ideally, a BASEL III Project Management Office (PMO) will be responsible for initial impact
assessment, identifying multiple tracks within the overall program, co-ordinating and monitoring the overall execution and reporting to
the senior management.
Impact Analysis
Strategy & Solution Maintenance &
& Track Implementation
Roadmap Definition Support
Segregation
• Program roadmap • Define individual • Product evaluation (if • Application • Ongoing
definition tracks within the required) customization and enhancements
• High level plan program • Architecture design build • Maintenance and user
• Establish current state • Impact analysis • Data analysis & • Data quality testing support
of compliance and requirement modeling • Functional testing • Platform migration
documentation
• PMO process • Technical design • Regression testing
definitions for change • Identify
• Data feed design • Non-functional
management, dependencies, risks
• Data sourcing and ETL testing
communication and assumptions
• Data sufficiency • Defect management
management and • Detail level planning
analysis and reporting
reporting for individual tracks
• Identify key • Identify the critical • Platform
stakeholders path Development
• Kick-off meeting with
all stakeholders
Basel III Implementation Timeline
Since the BASEL III requirements bring in critical buffers and significant capital outlays, the key aspects of the BASEL III guidelines will be
implemented in phases from January 2013 through 2018. This should give banks enough time to review their financial preparedness and
also enhance their operational and reporting capabilities.
PHASE IN ARRANGEMENTS
(Shading indicated transition periods - all dates are as of 1 January)
As of
2011 2012 2013 2014 2015 2016 2017 2018
1 Janurary 2019
Supervisory Parallel run 1 Jan 2013 - 1 Jan 2017 Migration
Legerage Ratio
Monitoring Disclosure starts 1 Jan 2015 to Pillar 1
Minimum Common Equity Capital Ratio 3.5% 4.0% 4.5% 4.5% 4.5% 4.5% 4.5%
Capital Conservation Buffer 0.625% 1.25% 1.875% 2.50%
Minimum Common Equity Plus Capital
3.5% 4.0% 4.5% 5.125% 5.75% 6.375% 7.0%
Conservation Buffer
Phase-in of deductions from CET1 (including amounts
20% 40% 60% 80% 100% 100%
exceeding the limit for DTAs, MSRs and Financials)
Minimum Tier 1 Capital 4.5% 5.5% 6.0% 6.0% 6.0% 6.0% 6.0%
Minimum Total Capital 8.0% 8.0% 8.0% 8.0% 8.0% 8.0% 8.0%
Minimum Total Capital plus Conservation Buffer 8.0% 8.0% 8.0% 8.625% 9.25% 9.875% 10.5%
Capital Instruments that no longer qualify as non-core
Phased out over 10 year horizon beginning 2013
Tier 1 capital or Tier 2 capital
Introduce
Observation
Liquidity Coverage Ratio Minimum
Period Begins
Standard
Introduce
Observation
Net Stable Funding Ratio Minimum
Period Begins
Standard
Source - The website for the Bank for International Settlements - http://www.bis.org/bcbs/basel3.htm
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7. Conclusion
BASEL III guidelines attempt to plug the gaps identified in BASEL
II. However, the world economy and financial markets are dynamic
and evolving ecosystems with many forces in play. Consequently,
financial regulations will keep on evolving. The intensity of regulatory
interventions is expected to increase in the future and the importance
of risk management is expected to further move up in the priority of
board members and top management.
It is therefore imperative that a BASEL III implementation is planned and
designed with a high degree of scalability to support future changes in
regulation. A BASEL III implementation should be taken as an opportunity
to remove a silo based approach to risk management and move towards
a reliable and scalable enterprise wide risk management system.
For such intent to be successful, an early start and preparation are
essential so that enough due diligence goes into laying down the
foundations of a strong risk management system.
About the Authors
Jitendra Kumar is a Principal Consultant with the Risk and Compliance Practice in the Financial Services and Insurance (FSI) Vertical at Infosys.
He has over 15 years of experience and has completed CFA level I & II from the CFA institute, USA.
He can be reached at Jitendrakumar@infosys.com
Sudarsan Kumar is a Senior Consultant with the Risk and Compliance Practice in the Financial Services and Insurance (FSI) Vertical at Infosys.
He has over 4 years of risk and compliance experience with data warehousing in Basel II.
He can be reached at Sudarsan_Kumar@infosys.com
Rohit VM is a Consultant with the Risk and Compliance Practice in the Financial Services and Insurance (FSI) Vertical at Infosys. His current
focus is on Basel III. Rohit earned his Post Graduate Diploma in General Management (PGDGM) from XLRI, Jamshedpur.
He can be reached at Rohit_V02@infosys.com
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