Certified Basel iii Professional (CBiiiPro)


The seminar has been designed to provide with the knowledge and skills needed to understand the new Basel III framework and to work in Basel III Projects.

Target Audience

This course is intended for managers and professionals working in Banks, Financial Organizations, Financial Groups and Financial Conglomerates who need to understand the new Basel III requirements, challenges and opportunities. It is also intended for management consultants, vendors, suppliers and service providers working for financial organizations.

This course is highly recommended for:

  •  -  Managers and Professionals involved in Basel III (decision making and implementation)
  •  -  Risk and Compliance Officers
  •  -  Auditors
  •  -  IT Professionals
  •  -  Strategic Planners
  •  -  Analysts
  •  -  Legal Counsels
  •  -  Process Owners

Course Synopsis

What is Basel III?
  • The Basel III papers
  • Was Basel II responsible for the market crisis?
  • Introduction to the Basel III Amendments
  • The Financial Stability Board (FSB), the G20 and the Basel III framework
1. The New Basel III Principles for risk management and corporate governance

The key areas where the Basel Committee believes the greatest focus is necessary

  1. Board practices
  2. Senior management
  3. Risk management and internal controls
  4. Compensation
  5. Complex or opaque corporate structures
  6. Disclosure and transparency
Sound Practices for the Management of Operational Risk
  • The 9 principles
2. The Quality of Capital
  • The numerator: A strict definition of capital
  • Limits and Minima
  • Common Equity Tier 1
  • Common shares issued by the bank
  • Additional Tier 1 capital
  • Tier 2 capital
  • Investments held by banks in capital instruments of other banks and financial and insurance entities
  • The corresponding deduction approach and the changes in the business model
  • Double Gearing and Basel III
  • Securitisation and Resecuritisation
3. The Risk Weighted Assets
  • The denominator: Enhanced risk coverage
  • Understanding securitization
4. The Capital Ratio
  • In addition to the quality of capital and risk coverage
  • Calibration
  • Transition period
5. Global Liquidity Standards
  • Introduction of global minimum liquidity standards
  • The Liquidity Coverage Ratio (LCR) that makes banks more resilient to potential short-term disruptions
  • Stock of high-quality liquid assets
  • Total net cash outflows
  • The Net Stable Funding Ratio (NSFR) that addresses longer-term structural liquidity mismatches
  • Available stable funding (ASF)
  • Required stable funding (RSF)
  • Contractual maturity mismatch
  • Concentration of funding
  • Available unencumbered assets
  • LCR by significant currency
  • Market-related monitoring tools
  • Transitional arrangements
6. Capital Conservation
  • Distribution policies that are inconsistent with sound capital conservation principles
  • Supervisors enforce capital conservation discipline
7. Leverage Ratio
  • Strong Tier 1 risk based ratios with high levels of on and off balance sheet leverage
  • Simple, non-risk-based leverage ratio
  • Introducing additional safeguards against model risk and measurement error
  • Calculation of the leverage ratio. The January 2014 amendment.
8. Countercyclical Capital Buffer
  • Procyclical or Countercyclical?
  • The new countercyclical capital buffer
  • Home / Host Challenges
  • Guidance for national authorities operating the countercyclical capital buffer
  • Principles underpinning the role of judgement
  • Principle 1: (Objectives)
  • Principle 2: (Common reference guide)
  • Principle 3: (Risk of misleading signals)
  • Principle 4: (Prompt release)
  • Principle 5: (Other macroprudential tools)
  • Jurisdictional reciprocity
  • Frequency of buffer decisions and communications
  • Treatment of surplus when buffer returns to zero
  • Interaction with Pillar 1 and 2
9. Systemically Important Financial Institutions (SIFIs)
  • SIFIs and G-SIFIs
  • Improvements to resolution regimes
  • Additional loss absorption capacity
  • More intensive supervisory oversight
  • Stronger robustness standards
  • Peer review
  • Developments at the national and regional level
  • The Financial Stability Oversight Council (FSOC)
  • The European Systemic Risk Board (ESRB)
  • Strengthening SIFI supervision
10. Systemically Important Markets and Infrastructures (SIMIs)
  • The Basel Committee and Financial Stability Board endorse central clearing and trade reporting on OTC derivatives
  • Derivative counterparty credit exposures to central counterparty clearing houses (CCPs)
11. Risk Modelling, Stress Testing and Scenario Analysis
  • Capture of systemic risk/tail events in stress testing and risk modelling
  • VaR shortcomings: the normality assumption
  • Need for a strong stress testing programme
  • Systemic risk capture in banks’ risk models
12. Stressed Value-at-Risk (S-VaR), Counterparty Credit Risk (CCR), Credit Valuation Adjustment (CVA), Wrong-Way Risk
  • Overview of the new requirements
  • Stressed Value-at-Risk (S-VaR)
  • Counterparty Credit Risk (CCR)
  • Credit Valuation Adjustment (CVA)
  • Wrong-Way Risk
Pillar 2 Amendments: Stress testing
  • Principles for sound stress testing practices and supervision
  • Use of stress testing and integration in risk governance
  • Stress testing methodologies
  • Scenario selection
  • Principles for sound stress testing practices and supervision
  • Firm-wide stress testing
  • 15 stress testing principles for banks
  • 6 stress testing principles for supervisors
Recognising the risk-mitigating impact of insurance in operational risk modelling
  • Insurance industry supervision
  • Banking supervisors’ assessment processes
  • Approval of insurance contracts
  • Revoking approval for recognising insurance mitigation in capital
  • Maximum 20% operational risk capital charge reduction
  • Modelling methodology
  • Traditional and proposed insurance policies
  • Criteria for recognising insurance mitigation
  • Partial insurance modeling
Understanding Supervisory Colleges
  • Good practice principles on supervisory colleges
  • Principles for both home and host supervisors
  • Principle 1: College objectives
  • Principle 2: College structures
  • Home supervisors, Host supervisors
  • Principle 3: Information sharing
  • Principle 4: Communication channels
  • Principle 5: Collaborative work
  • Principle 6: Interaction with the institution
  • Principle 7: Crisis management
  • Principle 8: Macroprudential work
  • Case Study: Committee of European Banking Supervisors, Joint decision on model validation
Basel III for international financial organizations
  • The Dodd-Frank Act in the USA and the Basel III framework
  • The Capital Requirements Directives (II, III, IV) of the European Union and the Basel III framework
The Impact of Basel III
  • 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
  • Interaction between Solvency II and Basel III
  • Regulatory Arbitrage after Basel III
  • Examples and Case Studies
  • Closing remarks
Reference - Islamic Banking and Basel III

Many Basel iii professionals need to have a good understanding of the Basel iii equivalent rules in Islamic Banking. This presentation is not necessary for the exam. There are no questions based on these slides

  • Islamic Banking and Basel ii / Basel iii
  • Islamic finance has continued to expand its potential as a sustainable and stable form of financial intermediation
  • Basel iii is designed for conventional banks
  • Profit Sharing Investment Accounts (PSIA)
  • The Basel II / Basel III equivalent rules developed by the Islamic Financial Standards Board (IFSB) and the Islamic Development Bank (IDB)
  • The liquidity risk management and liquidity ratios challenge
  • The setting up of the Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI) and the Islamic Financial Stability Forum (IFSF)
  • IFSB-13: Stress Testing principles
  • IFSB-12: Liquidity Risk
  • IFSB-10: Governance
  • Closing Remarks