Capital Adequacy and Regulatory Reporting | KPMG | GR

Capital Adequacy and Regulatory Reporting

Capital Adequacy and Regulatory Reporting

We support financial institutions in their compliance with regulatory requirements and to maintain the necessary capital reserves

We support financial institutions in their compliance with regulatory requirements...

Capital Adequacy & Regulatory Reporting services can help financial institutions comply with regulatory requirements and maintain a capital buffer as required under the EU Regulations based on Basel III, Solvency II and other regulations which are currently enforced. Furthermore, Capital Adequacy & Regulatory Reporting services can contribute in designing organizational structures and processes of financial institutions, ensuring compliance with regulatory and legal requirements.

KPMG's Financial Risk Management Services practice offers the following Capital Adequacy and Regulatory Reporting services:

Basel III compliance
Basel III initiative, which is intended to ensure that financial institutions have enough capital to cover their risks, ties their regulatory capital directly to their internal risks and their choices in managing them. It contains various measures aimed at increasing a) the quality of capital, with ultimate aim to improve loss-absorption capacity in both going concern and liquidation scenarios and b) the level of capital held by institutions, as well as providing counter-cyclical measures. 

The introduction of the leverage ratio could lead to reduced lending and is a clear incentive to banks to strengthen their capital position, although it remains to be seen whether the ratio will bite for individual firms.

The introduction of 30-day Liquidity Coverage ratio (LCR) and the Net Stable Funding Ratio (NSFR) is the regulatory response towards the importance of liquidity risk management and to encourage and incentivize banks to use stable sources to fund their activities to reduce the dependency on short-term wholesale funding.

Moreover, Basel III introduces a range of approaches to measuring credit, market and operational risk that enables banks to adopt methodologies that best suit their organization and risk profile. The lower the risk is and the better the risk management, the lower the regulatory capital requirement. The complexity of Basel III, as well as its interdependencies with other significant regulations, makes its implementation a complex corporate governance and risk management project, requiring a systematic approach.

Solvency II compliance
The time has come for an overhaul of the Insurance system, as regulation regarding known inadequacies has progressively become stronger in recent years. Solvency II is an opportunity to improve insurance regulation by introducing:

  • A more risk-based and integrated approach for insurance provisions and capital requirements
  • A comprehensive framework for risk management
  • Internal models for estimating capital requirements
  • Recognition of diversification and risk mitigation.


Regulatory Reporting

The production of regulatory reports, an obligation every financial institution has against its supervisors, is a complex, laborious and time consuming process. Any mistake entails the risk of inaccurate data submission, while regulatory requirements are often subject to changes. KPMG has developed the following types of specialized software applications to support the production of regulatory reports:

  • BOP (Balance of Payments) system, supporting balance of payments reports production to the Bank of Greece.
  • BICA and BOG systems - the second built upon the FiRE platform, comprehensive tools for respectively supporting: (a) the production of authenticated books of banks and (b) all the major reports to the Bank of Greece, except for Balance of Payments and Capital Adequacy (Basel III).


The use of these applications, in conjunction with KPMG's advisory services, is the most effective solution in terms of quality, time and cost.

 

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