In the aftermath of the financial crisis of 2008-2009, the Basel Committee of Banking Supervision (BCBS) embarked on a program of substantially revising its existing capital adequacy guidelines. The resultant capital adequacy framework is termed “Basel III”.
The Basel 3 framework introduces another major change in capital/liquidity standards. While the official implementation deadlines may seem a long way off, market and competitor pressure is already driving major change. Firms must engage with Basel 3 now to put themselves in the best competitive position in the post-crisis landscape.
Challenges companies are facing:
- Implications of regulatory capital and liquidity reforms incorporated within your corporate strategy, business model, risk appetite, investment decisions, and business development activity.
- Fully defined capital objectives effectively communicated within your businesses.
- Enhanced awareness of the profitability of your businesses and product pricing, due to a full reflection of capital consumption.
- Internal capital models, and their application across your business, reviewed to ensure that thecorrect amount of capital is consumed by your various products.
- Product design process is both capital and liquidity efficient.
- Demonstration of a strong capital and liquidity position to the market.
How can we help?
We have a range of specialists across KPMG who can advise you on all areas of Basel 3 implementation and optimization including:
- Regulatory Capital, where we can help you with gap assessments and capital impact analyses in light of ICAAP.
- Liquidity Risk Management, where we can assist with Internal Liquidity
- Adequacy Assessment Processes (ILAAP) and the development of analytics and tools to enhance the visibility of liquidity risks.
- Modeling and analytics: we can review an institution’s model usage in light of the applicable regulatory framework and relative to senior management’s defined objectives as well as assist with model design and governance.