Capital Requirements Directive IV / Capital Requirements Regulation Professional (CRDIV/CRR/Pro), distance learning and online certification program

Overview

The European Commission cannot simply copy/paste Basel III into its legislative proposal. There are two reasons for that:

First, Basel III is not a law. It is the latest configuration of an evolving set of internationally agreed standards developed by supervisors and central banks.

That has to go through a process of democratic control as it is transposed into EU (and national) law. It needs to fit with existing EU (and national) laws or arrangements. As EU law takes precedence over national law, the Commission's proposal launches that process.

Furthermore, while the Basel capital adequacy agreements apply to internationally active banks, in the EU it has always applied to all banks (more than 8,300) as well as investment firms.

This wide scope is necessary in the EU where banks authorised in one Member State can provide their services across the EU's single market and as such are more than likely to engage in cross-border business.

Also, applying the internationally agreed rules only to a subset of European banks would create competitive distortions and potential for regulatory arbitrage.

The Commission has had to take these particular circumstances into account when transposing Basel III into EU law.

The CRD IV Package is divided into two legislative instruments:

1. A directive - the Capital Requirements Directive (CRD), governing the access to deposit-taking activities.

2. A regulation - the Capital Requirements Regulation (CRR), establishing the prudential requirements institutions need to respect.

While Member States will have to transpose the directive into national law, the regulation is directly applicable, which means that it creates law that takes immediate effect in all Member States in the same way as a national instrument, without any further action on the part of the national authorities.

This removes the major sources of national divergences (different interpretations, gold-plating).

It also makes the regulatory process faster and makes it easier to react to changed market conditions.

It increases transparency, as one rule as written in the regulation will apply across the single market.

Before the CRD IV Package, European banking legislation was based on a Directive which leaved room for significant divergences in national rules.

This has created a regulatory patchwork, leading to legal uncertainty, enabling institutions to exploit regulatory loopholes, distorting competition, and making it burdensome for firms to operate across the Single Market.

In addition to Basel III implementation, the CRD/CRR introduces a number of important changes to the banking regulatory framework.

In the Directive
  •  -  Better risk management
  •  -  Enhanced corporate governance
  •  -  All supervisors can apply sanctions if EU rules are breached
  •  -  Enhanced supervision
  •  -  Less reliance by credit institutions on external credit ratings
In the Regulation

A “single rule book” (for the first time, a single set of harmonised prudential rules which banks throughout the EU must respect. This will ensure uniform application of Basel III in all Member States, it will close regulatory loopholes and will contribute to a more effective functioning of the Internal Market).

Target Audience

This course is intended for decision makers, managers, professionals and consultants that:

A. Work in Banks and Investment Firms of EEA countries.

B. Work in Groups - Financial Conglomerates (FC), Financial Holding Companies (FHC), Mixed Financial Holding Companies (MFHC), Banking Holding Companies (IHC), Systemically Important Financial Institutions (SIFIs) - providing services in the EEA.

C. Want to understand the challenges and the opportunities after the CRD IV Package (CRD/CRR).

Course Synopsis

Introduction
  • The European Union’s Legislative Process
  • Directives and Regulations
  • From the Financial Services Action Plan (FSAP) to the CRD 4 Package
  • CRD 1, 2 and 3 – An overview
  • Extraterritorial Application of European Law and Equivalence
  • The Lamfalussy Process
  • The Treaty of Lisbon and the changes in the delegation of implementing powers to the European Commission
  • Delegated and Implementing Acts
From Basel III to the CRD IV Package
  • The Basel III papers
  • Main differences between the Basel III and the CRD IV Package
  • Different Basel III implementations around the world: From the USA to the European countries, to the G-20 members, to the Offshore Financial Centers.
  • New powers for the European Banking Authority (EBA)
The Capital Requirements Directive (CRD)
  • Subject matter, scope and definitions
  • Competent authorities
  • Cooperation within the European System of Financial Supervision
  • Requirements for access to the activity of credit institutions
  • Authorisation
  • Refusal of authorisation
  • Withdrawal of authorisation
  • Provisions concerning the freedom of establishment and the freedom to provide services
  • Notification requirement and interaction between competent authorities
  • Powers of the competent authorities of the host Member State
  • Relations with third countries
  • Cooperation with supervisory authorities of third countries regarding supervision on a consolidated basis
  • Prudential supervision
  • Significant branches
  • Professional secrecy
  • Duty of persons responsible for the legal control of annual and consolidated accounts
  • Supervisory powers and powers to impose penalties
  • Review Processes
  • Internal Capital
  • Internal governance and recovery and resolution plans
  • Treatment of risks
  • Internal Approaches for calculating own funds requirements
  • Credit and counterparty risk
  • Residual risk
  • Concentration risk
  • Securitisation risk
  • Market risk
  • Interest risk arising from non-trading book activities
  • Operational risk
  • Liquidity risk
  • Risk of excessive leverage
  • Governance arrangements
  • Management body
  • Remuneration policies
  • Institutions that benefit from government intervention
  • Variable elements of remuneration
  • Remuneration Committee
  • Maintenance of a website on corporate governance and remuneration
  • Supervisory review and evaluation
  • Supervisory stress testing
  • Ongoing review of the permission to use internal approaches
  • Supervisory measures
  • Internal Capital Adequacy Assessment Process (ICAAP)
  • Institutions' arrangements, processes and mechanisms
  • Review and evaluation and supervisory measures
  • Supervision on a consolidated basis
  • Determination of the consolidating supervisor
  • Coordination of supervisory activities by the consolidating supervisor
  • Joint decisions on institution-specific prudential requirements
  • Information requirements in emergency situations
  • Coordination and cooperation arrangements
  • Colleges of supervisors
  • Cooperation obligations
  • Inclusion of holding companies in consolidated supervision
  • Supervision of mixed financial holding companies
  • Qualification of directors
  • Requests for information and inspections
  • Assessment of equivalence of third countries' consolidated supervision
  • Capital Buffers
  • Requirement to maintain a capital conservation buffer
  • Requirement to maintain an institution-specific countercyclical capital buffer
  • Global and other systemically important institutions
  • Reporting
  • Requirement to maintain a systemic risk buffer
  • Recognition of a systemic risk buffer rate
  • ESRB guidance on setting countercyclical buffer rates
  • Setting countercyclical buffer rates
  • Recognition of countercyclical buffer rates in excess of 2,5 %
  • ESRB recommendation on third country countercyclical buffer rates
  • Decision by designated authorities on third country countercyclical buffer rates
  • Calculation of institution-specific countercyclical capital buffer rates
  • Restrictions on distributions
  • Capital Conservation Plan
  • Disclosure by competent authorities
  • Delegated and implementing acts
  • Transitional and final provisions
  • Transposition
The Capital Requirements Regulation (CRR)
  • Subject matter, scope and definitions
  • Application of stricter requirements by institutions
  • Prudential consolidation
  • Financial holding company or mixed financial holding company with both a subsidiary credit institution and a subsidiary investment firm
  • Application of disclosure requirements on a consolidated basis
  • Methods for prudential consolidation
  • Entities excluded from the scope of prudential consolidation
  • Undertakings in third countries
  • Valuation of assets and off-balance sheet items
  • Elements of own funds
  • Tier 1 capital
  • Common Equity Tier 1 capital
  • Capital instruments of mutuals, cooperative societies, savings institutions or similar institutions in Common Equity Tier 1 items
  • Common Equity Tier 1 instruments
  • Consequences of the conditions for Common Equity Tier 1 instruments ceasing to be met
  • Capital instruments subscribed by public authorities in emergency situations
  • Securitised assets
  • Cash flow hedges and changes in the value of own liabilities
  • Unrealised gains and losses measured at fair value
  • Deductions from Common Equity Tier 1 items
  • Deduction of intangible assets
  • Deduction of deferred tax assets that rely on future profitability
  • Tax overpayments, tax loss carry backs and deferred tax assets that do not rely on future profitability
  • Deduction of defined benefit pension fund assets
  • Deduction of holdings of own Common Equity Tier 1 instruments
  • Significant investment in a financial sector entity
  • Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
  • Deduction of holdings of Common Equity Tier 1 instruments of financial sector entities
  • Deduction of holdings of Common Equity Tier 1 instruments where an institution does not have a significant investment in a financial sector entity
  • Deduction of holdings of Common Equity Tier 1 instruments where an institution has a significant investment in a financial sector entity
  • Threshold exemptions from deduction from Common Equity Tier 1 items
  • Requirement for deduction where consolidation, supplementary supervision or institutional protection schemes are applied
  • Additional Tier 1 items
  • Additional Tier 1 instruments
  • Restrictions on the cancellation of distributions on Additional Tier 1 instruments and features that could hinder the recapitalisation of the institution
  • Write down or conversion of Additional Tier 1 instruments
  • Deductions from Additional Tier 1 items
  • Deductions of holdings of own Additional Tier 1 instruments
  • Deduction of holdings of Additional Tier 1 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
  • Deduction of holdings of Additional Tier 1 instruments of financial sector entities
  • Deduction of holdings of Additional Tier 1 instruments where an institution does not have a significant investment in a financial sector entity
  • Tier 2 capital
  • Consequences of the conditions for Tier 2 instruments ceasing to be met
  • Deductions from Tier 2 items
  • Deductions of holdings of own Tier 2 instruments
  • Deduction of holdings of Tier 2 instruments of financial sector entities and where an institution has a reciprocal cross holding designed artificially to inflate own funds
  • Deduction of holdings of Tier 2 instruments of financial sector entities
  • Deduction of Tier 2 instruments where an institution does not have a significant investment in a relevant entity
  • Own funds
  • Continuing review of quality of own funds
  • Minority interest and Additional Tier 1 and Tier 2 instruments issued by subsidiaries
  • Qualifying holdings outside the financial sector
  • Required level of own funds
  • Calculation and reporting requirements
  • Capital requirements for credit risk
  • Standardised Approach
  • Calculation of risk weighted exposure amounts
  • Exposures to central governments or central banks
  • Exposures to regional governments or local authorities
  • Exposures to public sector entities
  • Exposures to corporates
  • Use of credit assessments by ECAIs
  • Mapping of ECAI's credit assessments
  • Internal Ratings Based Approach
  • Permission to use the IRB Approach
  • Conditions to revert to the use of less sophisticated approaches
  • Credit risk mitigation
  • Securitisation
  • Traditional securitisation
  • Synthetic securitisation
  • Counterparty credit risk
  • Permission to use the Internal Model Method
  • Integrity of the modelling process
  • Validation requirements
  • Own funds requirements for operational risk
  • Reverting to the use of less sophisticated approaches
  • Basic indicator approach
  • Standardised approach
  • Principles for business line mapping
  • Alternative standardised spproach
  • Advanced measurement approaches
  • Own funds requirements for credit valuation adjustment risk
  • Liquidity coverage requirement
  • Stable Funding
  • Compliance with liquidity requirements
  • Liquidity reporting
  • Reporting on stable funding
  • Items requiring stable funding
  • Calculation of the leverage ratio
  • Reporting requirement
  • Disclosure requirements
  • Non-material, proprietary or confidential information
  • Frequency of disclosure
  • Technical criteria on transparency and disclosure
  • Delegated acts
  • Technical adjustments and corrections
  • Macroprudential or systemic risk identified at the level of a Member State
  • Transitional provisions
Closing
  • Supervisory authorities around the world: What they have done, what they will do, why they choose to do so.
  • Regulatory differences, regulatory arbitrage, challenges and opportunities.
  • They all implement Basel iii - Supervisory differences: The range of practices around the world.
The Impact of Basel III / CRDIV Package
  • Investment Banking, Corporate Banking, Retail Banking
  • Investment banks are primarily affected, particularly in trading and securitization businesses
  • The new capital rules have a substantial impact on profitability
  • Banks with insurance subsidiaries
  • Minority investments after Basel III / CRD IV
  • Basel III and the competition among countries
  • Examples and Case Studies
  • Closing remarks

    For secure payment we work with PayPal, the faster and safer way to make online payments. With PayPal we minimize the cost of administration and compliance with national and international laws, so we can keep the cost of our programs and services so low.

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    When you click "Buy Now" below, you will be redirected to the PayPal web site. Your payment will be received by our strategic partner and service provider, Cyber Risk GmbH (Rebackerstrasse 7, 8810 Horgen, Switzerland, Handelsregister des Kantons Zürich, Firmennummer: CHE-244.099.341). Cyber Risk GmbH may also send certificates to all members.

    The all-inclusive cost is $297.

    What is included in the price:

    A. The official presentations we use in our instructor-led classes (1,792 main slides, 998 additional slides)

    B. Up to 3 Online Exams

    There is only one exam you need to pass, in order to become a Capital Requirements Directive IV / Capital Requirements Regulation Professional (CRDIV/CRR/Pro).

    If you fail, you must study again the official presentations, but you do not need to spend money to try again. Up to 3 exams are included in the price.

    To learn more you may visit:
    www.basel-iii-association.com/Questions_About_The_Certification_And_The_Exams_CRDIV.pdf

    www.basel-iii-association.com/Certification_Steps_CRDIV_CRR_Pro.pdf

    C. Personalized certificate

    Processing and posting to your office or home via registered mail.


    Frequently Asked Questions

    1. How comprehensive are the presentations? Are they just bullet points?

    Answer: The presentations are not bullet points, you can read them, understand, and learn. These are the official presentations we use in our instructor-led classes.

    2. Do I need to buy books to pass the exam?

    Answer: No. If you study the presentations, you can pass the exam. All the exam questions are clearly answered in the presentations.

    If you fail the first time, you must study more. Print the presentations and use Post-it to attach notes, like "Credit Risk", "Operational Risk" etc., to know where to find the answer of a question.

    3. Is it an open book exam? Why?

    Answer: Yes, it is an open book exam. Risk and compliance management is not something you have to memorize, it is something you must understand and learn.

    4. Do I have to sit for the exam soon after receiving the presentations?

    Answer: No. You can sit for the exam from your office or home, any time in the future. Your account never expires and there is no restriction of any kind.

    5. Do I have to spend more money in the future to remain certified?

    Answer: No. Your certificate never expires. It will be valid, without the need to spend money or to sit for another exam in the future.

    6. Ok, the certificate never expires, but things change.

    Answer: Recertification would be a great recurring revenue stream for the association, but it would also be a recurring expense for our members. We resisted the temptation to "introduce multiple recurring revenue streams to keep business flowing", as we were consulted. No recertification is needed for our programs.

    Things change, and this is the reason you need to become (at no cost) a member of the association. You will receive our monthly newsletter with updates, alerts and opportunities to stay current.

    7. How many hours do I need to study to pass the exam?

    Answer: It depends on your knowledge and experience. You must study the presentations at least twice, to ensure you have learned the details. The average time needed is about 46 hours, but there are important differences.

    8. I want to learn more about the online exam.

    Answer: You will be given 90 minutes to complete a 35-question multiple-choice exam. You must score 70% or higher.

    We do not send sample questions. If you study the presentations carefully, you can score 100%.

    9. Why should I get certified?

    Answer: After the failures of so many organizations during the recent crisis, firms and organizations hire "fit and proper" professionals who can provide evidence that they are qualified.

    Companies and organizations need assurance that employees have the knowledge and skills needed to mitigate risks, and to accept more responsibility. Supervisors and auditors ask for independent evidence that the process owners are qualified, and that the controls can operate as designed, because the persons responsible for these controls have the necessary knowledge and experience.

    The marketplace is clearly demanding qualified professionals in risk and compliance management. Certified professionals enjoy industry recognition and have more and better job opportunities.

    It is important to get certified and to belong to professional associations. You prove that you are somebody who cares, learns, and belongs to a global community of professionals.

    10. Why should I choose your certification program?

    Answer: It is always good to investigate first. You should search for other programs, using any search engine.

    We strongly believe that we offer the best value for money compared to all other Basel III training and certification programs:

    1. The Basel iii Compliance Professionals Association (BiiiCPA) is the largest association of Basel iii Professionals in the world. It is a business unit of the Basel ii Compliance Professionals Association (BCPA), which is the largest association of Basel ii Professionals in the world.

    2. The all-inclusive cost of the program ($297) is very low. There is no additional cost for this program, now or in the future, for any reason.

    3. There are 3 exams that are included in the cost of the program, so you do not have to spend money again if you fail.

    4. No recertification is required. Your certificate never expires.


    The Basel iii Compliance Professionals Association (BiiiCPA) is the largest association of Basel iii Professionals in the world. It is a business unit of the Basel ii Compliance Professionals Association (BCPA), which is also the largest association of Basel ii Professionals in the world.

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