US Basel III

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Course Features

  • Course Code: 101
  • Certificate: Yes
  • CPE Credits: 14
  • Level: Intermediate
  • Prerequisites: None
  • Method: Live & Virtual
  • Venue: Microtec
  • Time: 9:00 am – 5:00 pm
  • Registration: 8:30 am
  • Dress Code: Business Casual
  • Category:
  • Course Duration: 2 day
  • Available Course date: 05/30/2019

The last six years have seen a flurry of guidelines from the Basel Committee to update the international 2010 Basel III framework. All Basel rules were completed in December 2017; that last update is often referred to by some in the media as Basel IV.  At the same time, the US has finalized most rules based on the Basel III framework.  US banks have not only been busy trying to understand how US rules will impact them, but also trying to discern how those rules may change in light of recent Basel Committee recommendations on risk weighted asset modeling. This two-day interactive course is for any type of market participant who needs to understand how US Basel III rules will impact US banks.

Course Objectives

At the end of this course, participants should be able to:

  • Discuss what is the new definition of capital
  • Identify new capital requirements under new US Basel III rules
  • Discuss what types of banks will be required to meet new US rules
  • Identify key new guidelines proposed in Basel during 2013 that may impact US banks
  • Evaluate what aspects of the US rules are coming from Basel and which are influenced by Dodd-Frank

Module I        Overview of Basel II

  • Distinguish between three pillars of Basel II
  • Differentiate between three methodologies to measure credit risk in Pillar I
  • Highlight some of Basel II’s shortcomings

Module II       What is Capital?

  • Discuss new components of capital in Basel III
    1. Tier I, Tier II and relevant deductions
  • Identify changes in treatment of minority interests
  • Describe AOCI filer and its new treatment
  • Discuss requirements for new buffers
    1. Capital conservation
    2. Leverage
      • Compare Basel requirements to U.S. Dodd-Frank’s Supplementary Leverage Ratio
    3. Liquidity
    4. G-SIB surcharge
  • Evaluate how prompt corrective thresholds will work

 Module III     Changes in Standardized and Advanced Approaches

  • Enumerate new components of Standardized Approach
    1. Comparison of risk-weighted assets with Basel I & III
    2. Relationship to Pillar III disclosures
  • Describe changes to Advanced Approaches
    1. CVA
    2. Correlation factors
  • Discuss capital treatment of OTC derivatives
  • Discuss capital treatment of investments in financial and non-financial entities
    1. Basel vs. US Volcker Rule
  • Compare and contrast impact of changes in both approaches on capital required

 Module IV     U.S. Application and Timeline

  • Enumerate the types of banks in the US impacted by US Basel III rules
  • Describe timeline by which banks have to comply with US rules
    1. Standardized approach banks
    2. Advanced approach banks                      

Module V       BCBS 239

  • Enumerate and describes principles of risk data aggregation
  • Discuss why BCBS 239 is critical for Basel III

 Module VI     Effects of Basel III

  • Evaluate potential effect of Basel III on banks
  • Discuss potential impact of ignoring economic capital
  • Identify RWA optimization strategies
  • Analyze IT challenges

Module VII    Basel IV or Updated Basel Committee Guidelines

  • Describe new Basel guidelines and consultative documents finalized in December 2017
  • Discuss Basel guidelines to reduce RWA variability
  • Identify changes to operational risk measurement
  • Evaluate the Fundamental Review of the Trading Book
  • Explain how those proposals will impact US banks
  • Discuss upcoming proposed stress testing guidelines

Summary Conclusion and Question and Answer Session

 

Recent Articles By This Instructor About The Basel Accord 

Internationally Active Banks Are Meeting Initial Basel III Guidelines

Interview with Basel Committee General Secretary William Coen

Instructor

  • Mayra Rodríguez Valladares is Managing Principal of MRV Associates.  She specializes in training and consulting solutions for Basel III, Dodd-Frank, risk management, financial derivatives, capital markets, foreign exchange, and corporate finance.  She has worked with private sector and foreign central banks in the US, UK, Latin America Eastern Europe, Central and Southeast Asia, and Africa, …
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