Basel III and the Final Reforms: Capital, Liquidity and Leverage
The Basel reforms reshaped how banks hold capital, manage liquidity and control leverage.
About this course
The Basel reforms reshaped how banks hold capital, manage liquidity and control leverage. Over seven days, about 40 hours, this course explains the full Basel III package and the final reforms often called Basel IV, from the quality of capital and buffers to revised approaches for credit, market and operational risk and the output floor.
You will calculate key ratios, including the leverage ratio, LCR and NSFR, and connect Pillar 2 and Pillar 3 to supervision and disclosure. A closing case study looks at what the rules mean for a bank's strategy and capital planning.
What you'll learn
- Explain the evolution of the Basel framework and the reasons for post-crisis reform
- Describe the components and quality of regulatory capital and the buffers
- Calculate risk-weighted assets under standardised approaches for credit, market and operational risk
- Apply the output floor and explain the limits on internal models
- Calculate and interpret the leverage ratio, LCR and NSFR
- Relate Pillar 2 and Pillar 3 requirements to supervisory review and disclosure
- Assess the impact of the reforms on bank strategy and capital planning
Curriculum
- The Basel Committee and its role
- Basel I and Basel II in brief
- Lessons from the global financial crisis
- Basel III and the final reforms often called Basel IV
- Common Equity Tier 1, Additional Tier 1 and Tier 2
- Deductions and adjustments
- Capital conservation and countercyclical buffers
- Systemically important bank surcharges
- The revised standardised approach
- Exposure classes and risk weights
- Credit risk mitigation
- Constraints on internal ratings-based approaches
- The Fundamental Review of the Trading Book
- Boundary between banking and trading book
- Standardised and internal models approaches
- Credit valuation adjustment risk
- The new standardised approach
- Business indicator component
- Internal loss multiplier
- Operational risk management expectations
- Purpose of the output floor
- Calculation and phase-in
- Impact on banks using internal models
- Rationale for a non-risk-based backstop
- Exposure measure
- Leverage buffers for systemic banks
- Liquidity Coverage Ratio and high-quality liquid assets
- Net Stable Funding Ratio
- Liquidity monitoring tools
- Intraday liquidity
- Internal capital adequacy assessment
- Supervisory review and stress testing
- Interest rate risk in the banking book
- Market discipline and disclosure
- Capital and liquidity planning
- Impact on pricing, products and balance sheet
- Implementation challenges
- Case study: assessing a bank's position
Who it's for
Risk, finance, treasury, regulatory reporting and audit professionals in banks, and staff of supervisory authorities.
Before you start
- Working knowledge of bank balance sheets and financial risk
Part of these Alalamia diplomas
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