Training Objectives

By the end of the programme participates will be able to:

• Understand the overall structure of bank capital and liquidity regulation
• Understand how some of the calculations are done
• Understand the relative degree of impact each regulation has on a given bank
• Understand the overall impact of the regulations on a bank’s business model

Training Outline

• Retail and commercial banks’ business model
• The main types of risk it gives rise to: Credit Risk, Liquidity Risk, Market Risk, and Operational Risk 
• How the risks are mitigated: capital (‘owned funds’); how banks grow their capital; liquid assets and stable funding sources
• Why is there a regulation? Deposit protection and the Great Financial Crises
• The main source of banking regulation: Basel and its different versions (Basel I, II, III, etc.)
• The implementation process of Basel rules in the EU – the CRDs and CRRs
• Basel overview: risk mitigation via the ‘Three Pillars’
• Pillar One:

– Risk Quantification via Standardised Risk Weights or International Model (or ‘Advanced’)

– Capital Risk, Market Risk (Fundamentals Review of the Trading Book, FRTB, ‘Basel IV’) and Operational Risk calculations examples (Standardised Approach)

– Capital Risk and the impact of IFRS 9

– Interest Rate Risk in the Banking Book (IRRBB – actually Pillar Two but covered here as it is a form of Marker Risk)

– How Counterparty Credit Risk can arise on derivatives such as Interest Rate swaps, how EMIR )post REFIT) requires mitigation via Central clearing and margining but allows some exemptions

– How Credit valuation Adjustment (CVA) risk arises on uncleared swaps

– Summing up the capital requirements from the different risk areas

– Capital or ‘Own Funds’ – the different levels, Common Equity Tier 1, etc., the deduction from what can be counted as capital and the difference between accounting and regulatory capital

– The minimum Capital rations and the various buffets

– The Leverage ration and how it differs from the Capital Ration

– The impact of additional regulation: MREL and why it is a challenge for some banks

– The source of Liquidity risk and how they are mitigated: banks ‘run’, liquid assets and stable funding sources

– The impact of Capital and Liquidity regulation on banks

• Pillar Two: internal risk management quality and the Supervisory review
• Pillar Three: disclosure – an example from report

Who Should Attend

The course is designed to be suitable for those with limited knowledge of this are such as:

• Risk and Compliance Staff
• Front Office Staff
• Treasury Staff
• Supervisor Staff
• Corporate Treasurers

CPD Recognition

This programme may be approved for up to 5 CPD units in Banking and Financial Regulation. Eligibility criteria and CPD Units are verified directly by your association, regulator or other bodies which you hold membership.

In-house Training

For groups within the same organisation, this course may be customized to meet any specific needs and delivered in-house.