Fins3630 class presentation basel iii final
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Transcript of Fins3630 class presentation basel iii final
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BASEL IIIBy Vict
or
Setiawan Kath
y Ji
Mary Mao
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• RECAP: HISTORY OF BASEL ?
• WHAT IS BASEL III ?
• WHAT’S NEW IN BASEL III ?
• IMPLEMENTATION BY
APRA
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HISTORY OF BASEL ?
RECAP:
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WHAT IS BASEL III ?
BASEL 3.0: BUFFER THAN EVER
BEFORE
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WHAT’S NEW IN BASEL III ?
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CAPITAL
LIQUIDITY
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CAPITAL Minimum Capital Requirements
Non-allowable Capital
New Capital Buffers
Leverage Ratio
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CAPITAL Minimum Capital Requirements
Non-allowable Capital
New Capital Buffers
Leverage Ratio
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INCREASED CAPITAL REQUIREMENTS
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CAPITAL Minimum Capital Requirements
Non-allowable Capital
New Capital Buffers
Leverage Ratio
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CAPITAL Minimum Capital Requirements
Non-allowable Capital
New Capital Buffers
Leverage Ratio
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CAPITAL BUFFERS
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BASEL II vs. BASEL III
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CAPITAL Minimum Capital Requirements
Non-allowable Capital
New Capital Buffers
Leverage Ratio
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LEVERAGE
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LIQUIDITY Liquidity Coverage Ratio (LCR)
Net Stable Funding Ratio (NSFR)
Liquidity Risk
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LIQUIDITY Liquidity Coverage Ratio (LCR)
Net Stable Funding Ratio (NSFR)
Liquidity Risk
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LIQUIDITY COVERAGE RATIO
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LIQUIDITY Liquidity Coverage Ratio (LCR)
Net Stable Funding Ratio (NSFR)
Liquidity Risk
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NET STABLE FUNDING RATIO
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LIQUIDITY TIMELINE
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LIQUIDITY Liquidity Coverage Ratio (LCR)
Net Stable Funding Ratio (NSFR)
Liquidity Risk
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Fundamental Principle for Management & Supervision of
Liquidity RiskA bank should:
Be responsible for the sound management of liquidity risk
Establish a robust liquidity risk management framework
Assess the adequacy of both a bank's liquidity risk management framework and its liquidity position
Take prompt action if a bank is deficient
Protect depositors and to limit potential damage to the financial system.
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IMPLEMENTATION BY APRA
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Allows for the capital conservation buffer to be phased-in from 1 January 2016 and become fully effective on 1 January 2019
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Capital conservation buffer implemented in full from 1 January 2016
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TRANSITION OF LCR AND NSFR
Phase-in:1 January 2015 -> LCR requirement of 60%
+ 10% each year to reach 100 per cent on 1 January 2019.
APRA is not proposing to adopt this phase-in
arrangement for the LCR.
NSFR does not come into effect until 1 January 2018
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EXPECTED IMPACT ON ECONOMY
Financial markets0 Steeper yield curves 0 Lower yields for instruments qualifying as a part of the liquidity buffer
0 LCR used to fund government budget deficits post GFC.
The new liquidity rules are likely to 0 increase interest rates and 0 reduce available liquidity
Thus putting pressure on interest margins
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