The document summarizes the Basel Accords, which are international agreements that establish regulations on bank capital adequacy. Basel I established minimum capital requirements and risk weightings for assets. Basel II introduced more risk-sensitive capital requirements and three pillars for supervision. Basel III strengthened capital requirements after the 2008 crisis by requiring higher quality capital reserves and introducing leverage ratios and liquidity standards. The accords aim to promote global financial stability by reducing risk in the banking system.
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.
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.
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
This paper was presented at the SAFA Workshop on Impact of Basel II, held on September 8, 2014 in Dhaka, Bangladesh. By Sayyid Mansoob Hasan, FCMA - Chairman SAFA Task Force to develop a strategy to combat corruption in SAARC Region.
SAFA: South Asian Federation of Accountants
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
This paper was presented at the SAFA Workshop on Impact of Basel II, held on September 8, 2014 in Dhaka, Bangladesh. By Sayyid Mansoob Hasan, FCMA - Chairman SAFA Task Force to develop a strategy to combat corruption in SAARC Region.
SAFA: South Asian Federation of Accountants
Changes to Basel Regulation Post 2008 CrisisIshan Jain
Subprime crisis
Basel Committee objectives and history
Pillars of Basel 2 and Basel 3
Basel 3 Capital Requirements
capital Rations
Capital Buffers
Leverage Ratios
Global Liquidity Standards
macroeconomic factors
Value at Risk
Expected Shortfall
The impact of Basel III, also known as The Third Basel Accord, will vary by geography -- from potentially slowing down economies in emerging nations, to protecting the European Union from financial collapse, to increasing capital adequacy and improving risk management. Given the framework and timeline for implementing Basel III, the burden falls on national regulators to translate the international guidelines into national policies that suit and stabilize their economic environment and support economic growth.
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Capital adequacy requirements impose at least a minimum capital participation by bank owners,
usually expressed as a fraction of certain assets of the bank.
Similar to The regulation of banking industry (basel accord) (20)
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2. Elemental Economics - Mineral demand.pdfNeal Brewster
After this second you should be able to: Explain the main determinants of demand for any mineral product, and their relative importance; recognise and explain how demand for any product is likely to change with economic activity; recognise and explain the roles of technology and relative prices in influencing demand; be able to explain the differences between the rates of growth of demand for different products.
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The European Unemployment Puzzle: implications from population agingGRAPE
We study the link between the evolving age structure of the working population and unemployment. We build a large new Keynesian OLG model with a realistic age structure, labor market frictions, sticky prices, and aggregate shocks. Once calibrated to the European economy, we quantify the extent to which demographic changes over the last three decades have contributed to the decline of the unemployment rate. Our findings yield important implications for the future evolution of unemployment given the anticipated further aging of the working population in Europe. We also quantify the implications for optimal monetary policy: lowering inflation volatility becomes less costly in terms of GDP and unemployment volatility, which hints that optimal monetary policy may be more hawkish in an aging society. Finally, our results also propose a partial reversal of the European-US unemployment puzzle due to the fact that the share of young workers is expected to remain robust in the US.
US Economic Outlook - Being Decided - M Capital Group August 2021.pdfpchutichetpong
The U.S. economy is continuing its impressive recovery from the COVID-19 pandemic and not slowing down despite re-occurring bumps. The U.S. savings rate reached its highest ever recorded level at 34% in April 2020 and Americans seem ready to spend. The sectors that had been hurt the most by the pandemic specifically reduced consumer spending, like retail, leisure, hospitality, and travel, are now experiencing massive growth in revenue and job openings.
Could this growth lead to a “Roaring Twenties”? As quickly as the U.S. economy contracted, experiencing a 9.1% drop in economic output relative to the business cycle in Q2 2020, the largest in recorded history, it has rebounded beyond expectations. This surprising growth seems to be fueled by the U.S. government’s aggressive fiscal and monetary policies, and an increase in consumer spending as mobility restrictions are lifted. Unemployment rates between June 2020 and June 2021 decreased by 5.2%, while the demand for labor is increasing, coupled with increasing wages to incentivize Americans to rejoin the labor force. Schools and businesses are expected to fully reopen soon. In parallel, vaccination rates across the country and the world continue to rise, with full vaccination rates of 50% and 14.8% respectively.
However, it is not completely smooth sailing from here. According to M Capital Group, the main risks that threaten the continued growth of the U.S. economy are inflation, unsettled trade relations, and another wave of Covid-19 mutations that could shut down the world again. Have we learned from the past year of COVID-19 and adapted our economy accordingly?
“In order for the U.S. economy to continue growing, whether there is another wave or not, the U.S. needs to focus on diversifying supply chains, supporting business investment, and maintaining consumer spending,” says Grace Feeley, a research analyst at M Capital Group.
While the economic indicators are positive, the risks are coming closer to manifesting and threatening such growth. The new variants spreading throughout the world, Delta, Lambda, and Gamma, are vaccine-resistant and muddy the predictions made about the economy and health of the country. These variants bring back the feeling of uncertainty that has wreaked havoc not only on the stock market but the mindset of people around the world. MCG provides unique insight on how to mitigate these risks to possibly ensure a bright economic future.
BYD SWOT Analysis and In-Depth Insights 2024.pptxmikemetalprod
Indepth analysis of the BYD 2024
BYD (Build Your Dreams) is a Chinese automaker and battery manufacturer that has snowballed over the past two decades to become a significant player in electric vehicles and global clean energy technology.
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On the energy side, BYD is a major supplier of rechargeable batteries for cell phones, laptops, electric vehicles, and energy storage systems.
1. Elemental Economics - Introduction to mining.pdfNeal Brewster
After this first you should: Understand the nature of mining; have an awareness of the industry’s boundaries, corporate structure and size; appreciation the complex motivations and objectives of the industries’ various participants; know how mineral reserves are defined and estimated, and how they evolve over time.
1. The Regulation of Banking
Industry (Basel Accord)
AMRITA DEBNATH
ID# 708
MBA
DEPT. OF BANKING AND INSURANCE
UNIVERSITY OF DHAKA
2. Basel
The Basel Agreement
o An international agreement on new capital standards
o Designed to keep their capital positions strong
o Reduce inequalities in capital requirements among different countries
o Promote fair competition
o Catch up with recent changes in financial services and financial innovation
o In particular, the expansion of off-balance-sheet commitments
o Formally approved in July 1988
o Included countries such as:
The United States, Belgium, Canada, France, Germany, Italy, Japan, the
Netherlands, Spain, Sweden, Switzerland, the United Kingdom, and
Luxembourg
3. Objectives of Basel I
Objectives
• Strengthening the soundness and stability of the international
banking system
• Providing an internationally consistent level playing field with a
view to diminishing an existing source of competitive inequality
among international banks.
4. Components of Basel I
• Definition of capital
• Deduction regime
• A risk weighting approach
• A solvency ratio capital to weighted risk asset
5. Definition of Capital
Tier 1 (core) capital
o Common stock and surplus, undivided profits (retained
earnings), qualifying noncumulative perpetual preferred stock,
minority interest in the equity accounts of consolidated
subsidiaries, and selected identifiable intangible assets less
goodwill and other intangible assets
Tier 2 (supplemental) capital
o Allowance (reserves) for loan and lease losses, subordinated
debt capital instruments, mandatory convertible debt,
intermediate-term preferred stock, cumulative perpetual
preferred stock with unpaid dividends, and equity notes and
other long-term capital instruments that combine both debt
and equity features
6. Definition of Capital
For a bank to qualify as adequately capitalized, it must have:
A ratio of core capital (Tier 1) to total risk-weighted assets of at
least 4 percent
A ratio of total capital (the sum of Tier 1 and Tier 2 capital) to
total risk-weighted assets of at least 8 percent, with the
amount of Tier 2 capital limited to 100 percent of Tier 1 capital
7. Deduction Regime
• Deduction of accounting goodwill
• Investments in other regulated financial institutions
• Certain accounting items were deducted but then treated as tier 2
capita
• Revaluation of reserve of holding of equity instrument as tier 2
8. Risk Weighting Approach
• Risk weighting summary
Risk Weight Loans and Investment
0% Cash and OECD
10% Some public sector entities
20% Banks in the OECD and short term loans to non OECD
banks
50% Residential mortgages
Long term unfunded commitments
100% Most other assets, including corporate and retailing;
non OECD governments and long term loans to non-
OECD banks; real estate and equity exposure
9. Calculating Risk Weight Asset
Each asset item on a bank’s balance sheet and each off-balance-sheet
commitment it has made are multiplied by a risk-weighting factor
o Designed to reflect its credit risk exposure
The most closely watched off-balance-sheet items are standby letters of credit
and long-term, legally binding credit commitments
To compute this bank’s risk-weighted assets:
o Compute the credit-equivalent amount of each off-balance-sheet (OBS)
item
o Multiply each balance sheet item and the credit-equivalent amount of
each OBS item by its risk weight
10. Ratio capital to weighted risk asset
• Minimum Capital requirement is 8%
11. Modification
• In 1996, Basel I include the capital charges for market risk
• Value at Risk (VaR) Models Responding to Market Risk
12. Objectives of Basel 2
To improve the risk management
Resilience banking industry
Make capital requirements more risk sensitive and therefore relevant
Utilize the information, resources and judgments of the banks
themselves
15. Credit risks
• Elements of expected loss calculation
Default probability
Exposure of default
Loss given default
Maturity of the exposure
Type of lending
16. Risk-weighting of Corporate Loans
Credit Rating of Corporate Risk-weight of Exposure (Under Basel II)
AAA to AA- 20%
A+ to A- 50%
BBB+ to BB- 100%
Below BB- 150%
Unrated 100%
17. Market Risk
• General market risk VaR model is used.
• Risk on a day to day basis VaR is useful but it is used in extreme
situations.
18. Operational Risk
• Operational risks that are operation in nature
Fraud
System failure
Fire
• It includes legal risk but excludes strategic and reputational risk.
20. Pillar 3: Market Discipline
• The committee aims to encourage market discipline by developing a
set of disclosure requirements which will allow market participants to
assess key pieces of information on the scope of application, capital,
risk exposures.
21. Critiques of Basel 2
1. Complexity
2. Liquidity
3. Incomplete implementation
4. Over reliance on credit rating agencies
5. Market risk module not fit for purpose
22. Basel III
• The third installment of the Basel Accords was developed in response
to the deficiencies in financial regulation revealed by the financial
crisis of 2007–08
• Unlike Basel I and Basel II, which focus primarily on the level of bank
loss reserves that banks are required to hold, Basel III focuses
primarily on the risk of a run on the bank, requiring differing levels of
reserves for different forms of bank deposits and other borrowings
• On 17 Dec. 2009, the Basel Committee published its ‘Consultative
Proposals to Strengthen the Resilience of the Banking Sector’
23. Capital Requirements
Basel II Basel III
Deductions Largely from Tier I and total capital All deductions from CET1
Denominator Basel II RWAs Basel III RWAs
CET1 2% 4.5%
Tier 1 4% 6%
Total Capital 8% 8%
24. Capital Requirements (Contd.)
A mandatory “Capital Conservation Buffer", equivalent to 2.5% of
risk-weighted assets. Considering the 4.5% CET1 capital ratio
required, banks have to hold a total of 7% CET1 capital, from 2019
onwards.
A “Discretionary Counter-cyclical Buffer", allowing national
regulators to require up to an additional 2.5% of capital during
periods of high credit growth. The level of this buffer ranges between
0% and 2.5% of RWA and must be met by CET1 capital.
25. Leverage Ratio
• This is a non-risk-based leverage
ratio and is calculated by
dividing Tier 1 capital by the
bank's average total
consolidated assets (sum of the
exposures of all assets and non-
balance sheet items)
• The banks are expected to
maintain a leverage ratio in
excess of 3% under Basel III.
26. Liquidity Requirements
• The "Liquidity Coverage Ratio"
was supposed to require a bank
to hold sufficient high-quality
liquid assets to cover its total net
cash outflows over 30 days.
• The Net Stable Funding
Ratio was to require the
available amount of stable
funding to exceed the required
amount of stable funding over a
one-year period of extended
stress.
27. Major Issues with Basel III
Incremental and an Excessive Focus on Capital and Liquidity
Regulation
Excessive Complexity
New Risks: Sovereign Debt, CCPs and Shadow Banking
Timing: Risk of a Credit Crunch
Continued Reliance on the Credit Assessment of Either Internal
Models or External Ratings Agencies