Capital and Prudential Standards Blog

Overview of Basel Framework Implementation Progress (as of Q1 2014)

Posted on April 7, 2014, by Andrew S. Fei in Basel Committee, Basel III - International, Leverage Ratios, Liquidity, Reports and Studies, Risk-Based Capital Ratio.

The Basel Committee has published the following table on the implementation progress of the Basel capital and liquidity framework for each member jurisdiction as of Q1 2014. The Basel Committee has published implementation progress reports on a semi-annual basis since October 2011.

In addition, the Basel Committee report contains a schedule of future Regulatory Consistency Assessment Programme (RCAP) assessments. Through RCAP, the Basel Committee monitors the adoption of regulations by its members, assesses their consistency with the Basel framework and analyzes the quality of intended regulatory outcomes.… Read More

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Basel Committee Issues Consistency Report on Australia’s Implementation of Basel III

Posted on March 17, 2014, by Andrew S. Fei in Basel Committee, Basel III - International, Reports and Studies.

Today, the Basel Committee published a report on the regulations that implement the Basel capital framework in Australia.

According to the Basel Committee, Australia’s implementation of the Basel capital framework was found to be closely aligned with the Basel III standards: 12 out of 14 assessed components were found to be “Compliant”. The two components that were graded “Largely Compliant” were the “Definition of Capital” and the “Internal Ratings-Based Approach for credit risk,” where some differences exist vis-à-vis the Basel framework.… Read More

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Basel Committee Chairman Discusses Next Steps for the Basel Committee

Posted on February 1, 2014, by Luigi L. De Ghenghi and Andrew S. Fei in Advanced Approaches, Banking Book, Basel Committee, Basel III - International, Leverage Ratios, Pillar 3, Reports and Studies, Risk-Based Capital Ratio, Risk-Weighted Assets, Speeches.

Basel Committee Chairman Stefan Ingves has delivered a speech discussing the Basel Committee’s policy agenda over the next year, noting that “there is still a lot on the Committee’s plate – at last count, a total of around 50 projects.” Among other topics, Chairman Ingves discussed the variation of risk-weighted assets (RWAs) among banks and potential policy responses.

The Basel Committee has published three studies on the variation of RWAs among banks – two for the trading book (our earlier blog post on this topic is available here) and one for the banking book (our earlier blog post on this topic is available here). … Read More

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Basel Committee Discusses Fundamental Elements of a Bank’s Capital Planning Process

Posted on January 23, 2014, by Luigi L. De Ghenghi and Andrew S. Fei in Basel Committee, Basel III - International, Capital Planning & Stress Tests, CCAR, Governance, Reports and Studies, Risk Governance, Supervisory Guidance.

Today, the Basel Committee published a paper that discusses four fundamental components of a sound capital planning process: (1) internal control and governance; (2) capital policy and sufficient risk capture; (3) forward-looking view through stress testing; and (4) management framework for preserving capital.

The Basel Committee stated that its paper does not set forth new capital planning guidance. Rather, it presents sound practices observed at some banks, which the Basel Committee believes can foster overall improvement in banks’ capital planning processes. … Read More

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Definition of High-Quality Liquid Assets: U.S. LCR Proposal vs. European Banking Authority Recommendations

Posted on December 24, 2013, by Luigi L. De Ghenghi and Andrew S. Fei in Basel III - International, Basel III - US, European Regulators, Liquidity, Reports and Studies.

We have prepared a high-level comparison of (1) the definition of high-quality liquid assets in the U.S. liquidity coverage ratio (LCR) proposal and (2) the assets found to be of extremely high liquidity and credit quality (extremely HQLAs) and of high liquidity and credit quality (HQLAs) in the European Banking Authority’s recent report on the uniform definitions of extremely HQLAs and HQLAs. Pursuant to CRD IV, the European Commission will consider the European Banking Authority’s report for purposes of introducing a detailed and harmonized LCR requirement in the EU.… Read More

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European Banking Authority Publishes Reports on Liquidity Coverage Ratio

Posted on December 20, 2013, by Luigi L. De Ghenghi and Andrew S. Fei in Basel III - International, European Regulators, Liquidity, Reports and Studies.

Today, pursuant to CRD IV, the European Banking Authority (EBA) published two reports on the liquidity coverage ratio (LCR). The first report concerns the appropriate uniform definitions of extremely high quality liquid assets (extremely HQLAs) and high quality liquid assets (HQLAs) and operational requirements for liquid assets. The second report assesses the impact of an LCR requirement in the EU. The two reports provide the European Commission with specific recommendations for the purpose of its forthcoming delegated act setting forth a uniform LCR requirement in the EU.… Read More

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