Certified Basel iii Professional (CBiiiPro)


The program has been designed to provide with the knowledge and skills needed to understand the Basel III framework, and to work in Basel III Projects. The course provides with the skills needed to pass the Certified Basel iii Professional (CBiiiPro) exam. We have updated the program the 5th of May, 2018.

Target Audience

This course is intended for managers and professionals working in banks, financial organizations, financial groups and financial conglomerates. 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
  •  -  Process owners
  • This course is intended for employers demanding qualified professionals that meet the fit and proper requirements.

Course Synopsis

What is Basel III?
Basel III, the G20 and the FSB.
The Bank for International Settlements (BIS).
The Basel Committee on Banking Supervision.
The Basel III Framework.
National rules implementing Basel III.

The important Basel III Amendments:

Amendment 1. Corporate Governance and Risk Management.
Sound corporate governance principles.
a. Board practices.
b. Senior management.
c. Risk management and internal controls.
d. Compensation.
e. Complex or opaque corporate structures.
f. Disclosure and transparency.
The role of supervisors.

Amendment 2. The regulatory capital.
Capital, the numerator.
Understanding the Basel III language.
Debt Securities.
Commercial papers.
Equity securities (common stock).
Preferred stock.
Cumulative preferred stock.
Contingent convertibles (CoCos).
Perpetual and non-perpetual preferred stocks.
Paid-up capital.
Undisclosed reserves.
Subordinated debt.
Stock surplus (share premium).
Hybrid capital instruments.
Comprehensive income.
Other comprehensive income (OCI).
Accumulated other comprehensive income (AOCI).
Retained earnings.
Intangible assets.
Step-up provisions.
Going concern.
Gone concern.
Risk Weighted Assets (RWA).
Deferred tax.

Capital, the numerator.
A strict definition of capital.
1. Tier 1 Capital (going-concern capital).
1a. Common Equity Tier 1 (CET1).
1b. Additional Tier 1 (AT1).
2. Tier 2 Capital (gone-concern capital).
Limits and Minima.
Understanding Common Equity Tier 1 capital.
Common Equity Tier 1, the 14 criteria.
Criteria for inclusion in Additional Tier 1 capital.
Criteria for inclusion in Tier 2 Capital.
Common shares issued by consolidated subsidiaries.
Tier 1 and Tier 2 qualifying capital issued by consolidated subsidiaries.
Regulatory adjustments.
Double gearing.
Disclosure requirements.

Amendment 3. The Risk Weighted Assets (RWA), the denominator.
Enhanced risk coverage.
The RWA after the December 2017 Basel III reforms.
The 2017 reforms concentrate on the RWAs (the denominator).

Amendment 4. The Capital Ratio.
The 4.5% and the 7% common equity ratio.

Amendment 5. Credit Risk after December 2017.
The standardised approach (SA) for credit risk.
The internal ratings-based (IRB) approaches.
a. The Foundation IRB (F-IRB).
b. The Advanced IRB (A-IRB).
Standardised approach for credit risk.
The new due diligence requirements.
Exposures to sovereigns.
Exposures to non-central government public sector entities (PSEs).
Exposures to multilateral development banks (MDBs).
Exposures to banks.
(a) External Credit Risk Assessment Approach (ECRA).
(b) Standardised Credit Risk Assessment Approach (SCRA).
Exposures to covered bonds.
Exposures to securities firms and other financial institutions.
Exposures to corporates.
Specialised lending.
Subordinated debt, equity and other capital instruments.
Retail exposures.
Off-balance sheet items.
Defaulted exposures.
Recognition of external ratings by national supervisors.
Credit risk mitigation (CRM) techniques.
Collateralised transactions.

December 2017 – Internal ratings-based (IRB) approach for credit risk.
Unexpected losses (UL), expected losses (EL).
Categorisation of exposures.
Asset classes.
(a) corporate,
(b) sovereign,
(c) bank,
(d) retail, and
(e) equity.
Adoption of the IRB approach for asset classes.
December 2017, stress tests used in assessment of capital adequacy.

Amendment 6. Operational Risk after December 2017.
Reputational risk.
Systemic risk.
Strategic risk.
The standardised approach methodology.
The Business Indicator (BI).
The Business Indicator Component (BIC).
Regulatory determined marginal coefficients.
The Internal Loss Multiplier (ILM).
The BI=ILDC+SC+FC formula.
The standardised approach operational risk capital requirement.
Application of the standardised approach within a group.
General criteria on loss data identification, collection and treatment.
Specific criteria on loss data identification, collection and treatment.

Amendment 7. Global Liquidity Standards.
Principles for Sound Liquidity Risk Management and Supervision.

The Liquidity Coverage Ratio (LCR).
Amendments to the LCR.
The stock of high-quality liquid assets.
Level 1 assets.
Level 2 assets.
Level 2B assets.
Total net cash outflows.

The Net Stable Funding Ratio (NSFR).
Available Stable Funding (ASF).
ASF factors.
Required Stable Funding (RSF)
RSF factors

Monitoring tools.
a. Contractual maturity mismatch.
b. Concentration of funding.
c. Available unencumbered assets.
d. LCR by significant currency.
e. Market-related monitoring tools.

Differences in home / host liquidity requirements.
Guidance for Supervisors on Market-Based Indicators of Liquidity.
Liquidity Coverage Ratio Disclosure Standards.

Amendment 8. The Capital Conservation Buffer.
Distribution policies inconsistent with capital conservation.
The restriction of dividends and bonuses.
The buffer of risk-weighted assets.

Amendment 9. The Countercyclical Capital Buffer.
What is procyclical and countercyclical.
The buffer.
Guidance for national authorities operating the countercyclical capital buffer.
Principles underpinning the role of judgement.
Jurisdictional reciprocity.

Amendment 10. The Leverage Ratio.
The Basel III leverage ratio framework.
The scope of the leverage ratio.
The ratio.
(a) On-balance sheet exposures.
(b) Derivative exposures.
(c) Securities financing transaction exposures.
(d) Off-balance sheet (OBS) items.
Disclosure requirements.
Disclosure templates.
The leverage ratio after December 2017.
The leverage ratio buffer for global systemically important banks (G-SIBs).
Implementation and monitoring.

Amendment 11. Systemically Important Financial Institutions (SIFIs).
The additional degree of loss absorbency.
Lists of global systemically important banks (G-SIBs).
Updated assessment methodology and the higher loss absorbency requirement.
a. The size of banks.
b. Their interconnectedness.
c. The lack of readily available substitutes or financial institution infrastructure for the services they provide.
d. Their global (cross-jurisdictional) activity.
e. Their complexity.

Amendment 12. Risk Modelling, Stress Testing and Scenario Analysis.
Value-at-risk (VaR).
Standard Normal Distribution.
VaR shortcomings.
Capture of systemic risk/tail events in stress testing and risk modelling.

Amendment 13. Stressed Value-at-Risk (S-VaR), Counterparty Credit Risk (CCR), Credit Valuation Adjustment (CVA).
Stressed Value-at-Risk (S-VaR).
Stressed VaR merges stress testing with VaR.
A stochastic process, a deterministic process.
Monte Carlo Simulation.
The Turner Review, four categories of problems.
Counterparty Credit Risk (CCR).
Credit Valuation Adjustment (CVA).
The adjustments to transaction valuation, to reflect the counterparty’s credit quality.
One-sided CVA, two-sided CVA.
CVA Risk Capital Charge.
Monte Carlo Simulation and CVA.
CVA after December 2017.

Amendment 14. The output floor (December 2017 update).
Reducing excessive variability of risk-weighted assets.
Output floor requirements.
Calculation of the output floor.
Disclosure requirements.
Implementation date and transitional measures.

Islamic Banking and Basel III.
(Reference. There are no exam questiond from this part).

Basel III was not designed for Institutions offering Islamic Financial Services (IIFS).
The Basel III equivalent rules.
The Islamic Financial Services Board (IFSB).
The IFSB standards that implement Basel III equivalent rules.
The Islamic Financial Stability Forum (IFSF).
The International Islamic Liquidity Management Corporation (IILM).
The Islamic Development Bank (IDB).
The Accounting and Auditing Organisation for Islamic Financial Institutions (AAOIFI).
Understanding Profit-sharing investment accounts (PSIAs).
Musharakah and Mudarabah partnerships.
IFSB 1 - Guiding Principles of Risk Management.
IFSB 12 - Guiding Principles on Liquidity Risk Management.
IFSB 13 - Guiding Principles on Stress Testing.
IFSB 15 - Revised Capital Adequacy Standard.
IFSB 16 - Revised Guidance on Key Elements In The Supervisory Review Process.
IFSB 17 - Core Principles for Islamic Finance Regulation (Banking Segment) (CPIFR).
IFSB 19 - Guiding Principles on Disclosure Requirements.
Closing remarks.