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    From The Basel Iii Compliance Professionals Association (Biiicpa)

    Uploaded by

    Vinay Sonkhiya
    The document summarizes key changes to capital requirements between Basel II and Basel III. It outlines increasing Tier 1 capital ratio requirements up to 6% under Basel III from 4% under Basel II. A capital conservation buffer of 2.5% is also introduced in Basel III to withstand future stress. A countercyclical capital buffer between 0-2.5% will also be implemented according to national circumstances. Systemically important banks may also face additional capital requirements beyond the standards outlined.

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    From The Basel Iii Compliance Professionals Association (Biiicpa)

    Uploaded by

    Vinay Sonkhiya
    103 views4 pages
    The document summarizes key changes to capital requirements between Basel II and Basel III. It outlines increasing Tier 1 capital ratio requirements up to 6% under Basel III from 4% under Basel II. A capital conservation buffer of 2.5% is also introduced in Basel III to withstand future stress. A countercyclical capital buffer between 0-2.5% will also be implemented according to national circumstances. Systemically important banks may also face additional capital requirements beyond the standards outlined.

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    BASEL

    Original Title

    basel 111

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    The document summarizes key changes to capital requirements between Basel II and Basel III. It outlines increasing Tier 1 capital ratio requirements up to 6% under Basel III from 4% under Basel II. A capital conservation buffer of 2.5% is also introduced in Basel III to withstand future stress. A countercyclical capital buffer between 0-2.5% will also be implemented according to national circumstances. Systemically important banks may also face additional capital requirements beyond the standards outlined.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    103 views4 pages

    From The Basel Iii Compliance Professionals Association (Biiicpa)

    Uploaded by

    Vinay Sonkhiya
    The document summarizes key changes to capital requirements between Basel II and Basel III. It outlines increasing Tier 1 capital ratio requirements up to 6% under Basel III from 4% under Basel II. A capital conservation buffer of 2.5% is also introduced in Basel III to withstand future stress. A countercyclical capital buffer between 0-2.5% will also be implemented according to national circumstances. Systemically important banks may also face additional capital requirements beyond the standards outlined.

    Copyright:

    © All Rights Reserved
    Download as DOC, PDF, TXT or read online from Scribd
    Download as doc, pdf, or txt
    of 4

    The Basel iii Accord

    From the Basel iii Compliance


    Professionals Association (BiiiCPA)
    Prepare for Basel iii
    Become a member of the Basel iii
    Compliance Professionals Association
    (BiiiCPA). Membership is free.
    Connect with the global community of
    professionals, to gain insight into the G20
    efforts to regulate the global financial
    system, to explore new career avenues and
    most of all, to acquire lifelong skills.

    A. Tier 1 Capital
    A1. BASEL II:
    Tier 1 capital ratio = 4%
    Core Tier 1 capital ratio = 2%
    The difference between the total capital
    requirement of 8.0% and the Tier 1
    requirement can be met with Tier 2 capital.
    A2. BASEL III:
    Tier 1 Capital Ratio = 6%
    Core Tier 1 Capital Ratio (Common Equity
    after deductions) = 4.5%
    Core Tier 1 Capital Ratio (Common Equity
    after deductions) before 2013 = 2%, 1st
    January 2013 = 3.5%, 1st January 2014 = 4%,
    1st January 2015 = 4.5%
    The difference between the total capital

    requirement of 8.0% and the Tier 1


    requirement can be met with Tier 2 capital.

    B. Capital Conservation Buffer


    B1. BASEL II:
    There is no capital conservation buffer.
    B2. BASEL III:
    Banks will be required to hold a capital
    conservation buffer of 2.5% to withstand
    future periods of stress bringing the total
    common equity requirements to 7%.
    Capital Conservation Buffer of 2.5 percent, on
    top of Tier 1 capital, will be met with common
    equity, after the application of deductions.
    Capital Conservation Buffer before 2016 =
    0%, 1st January 2016 = 0.625%, 1st January
    2017 = 1.25%, 1st January 2018 = 1.875%,
    1st January 2019 = 2.5%
    The purpose of the conservation buffer is to
    ensure that banks maintain a buffer of capital
    that can be used to absorb losses during
    periods of financial and economic stress.
    While banks are allowed to draw on the buffer
    during such periods of stress, the closer their
    regulatory capital ratios approach the
    minimum requirement, the greater the
    constraints on earnings distributions.

    C. Countercyclical Capital Buffer


    C1. BASEL II:

    There is no Countercyclical Capital Buffer


    C2. BASEL III:
    A countercyclical buffer within a range of 0%
    2.5% of common equity or other fully loss
    absorbing capital will be implemented
    according to national circumstances.
    Banks that have a capital ratio that is less
    than 2.5%, will face restrictions on payouts of
    dividends, share buybacks and bonuses.
    The buffer will be phased in from January
    2016 and will be fully effective in January
    2019.
    Countercyclical Capital Buffer before 2016 =
    0%, 1st January 2016 = 0.625%, 1st January
    2017 = 1.25%, 1st January 2018 = 1.875%,
    1st January 2019 = 2.5%

    D. Capital for Systemically Important


    Banks only
    D1. BASEL II:
    There is no Capital for Systemically
    Important Banks
    D2. BASEL III:
    Systemically important banks should have
    loss absorbing capacity beyond the standards
    announced today and work continues on this
    issue in the Financial Stability Board and
    relevant Basel Committee work streams.
    The Basel Committee and the FSB are
    developing a well integrated approach to
    systemically important financial institutions

    which could include combinations of capital


    surcharges, contingent capital and bail-in
    debt.

    Total Regulatory Capital Ratio =


    [Tier 1 Capital Ratio] + [Capital
    Conservation Buffer] +
    [Countercyclical Capital Buffer] +
    [Capital for Systemically Important
    Banks

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