WHAT'S NEW?

FINANCIAL MARKET COURSES

Basel III - Liquidity & Leverage

The financial crisis highlighted the weaknesses in the liquidity management practices of banks and the lack of adequate oversight by regulators. A key contributory factor was the aggressive growth in bank balance sheets that was largely financed by increased wholesale funding rather that longer-term retail deposits or increased capital.

 

In response to these issues, the Basel Committee on Banking Supervision (BCBS) introduced new measures as part of Basel III to address both liquidity risk and leverage. This course describes the Basel III liquidity and leverage ratios, details the implementation issues, and outlines the potential impact on banks.

  • OBJECTIVES

    On completion of this course, you will be able to:

    Describe the lessons learned from the financial crisis with respect to liquidity and leverage

    Explain how the Liquidity Coverage Ratio (LCR) is determined, including the calculation of high quality liquid assets (numerator) and net cash outflows (denominator)

    Explain how the Net Stable Funding Ratio (NSFR) is calculated and the difference between available stable funding (numerator) and required stable funding (denominator)

    Outline the need for a leverage ratio and the formula used to calculate it

    Detail the implementation issues and timeline associated with all of these ratios

  • COURSE OUTLINE

    Topic 1: The Financial Crisis, Liquidity Risk & Leverage

    Liquidity Risk & Liquidity Risk Management

    Developments that Affected Liquidity Risk

    o Capital Market Funding

    o Securitization

    o Complex Financial Instruments

    o Collateral

    Leverage & Liquidity Risk

    Lessons Learned

    Regulatory Response

    Topic 2: Liquidity Coverage Ratio (LCR)

    Objective of the LCR

    How is the LCR calculated?

    High Quality Liquid Assets (HQLAs)

    o Tiered Approach

    Cash Flow Measurement

    Implementation

    o Timeline

    o Issues

    Topic 3: Net Stable Funding Ratio (NSFR)

    Objective of the NSFR

    How is the NSFR Calculated?

    What is Stable Funding?

    o Available Stable Funding (ASF)

    o Required Stable Funding (RSF)

    Implementation

    o Timeline

    o Issues

    Topic 4: Leverage Ratio

    The Need for a Leverage Ratio

    o Advantages

    o Disadvantages

    How is the Leverage Ratio Calculated?

    Implementation

    o Timeline

    o Issues

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

Next Course

VIEW COURSE

INTERMEDIATE

Support

Accreditations

General: info@intuition.com

Accounts: ar@intuition.com

http://support.intuition.com

Intuition engages with over 30 accreditation bodies to ensure Know-How can be used for CPE credits. If your organization needs CPE from a body not listed below, contact us and we will endeavour to have them included.

© Copyright 2016 by Intuition. All Rights Reserved.