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FINANCIAL MARKET COURSES

Basel III - Pillar 2 & Pillar 3

The three pillars approach was introduced under Basel II to ensure that, in addition to specific capital requirements for credit, market, and operational risk (Pillar 1), there was a means to assess other risks and capital adequacy (Pillar 2) and to improve market discipline through increased disclosure (Pillar 3).

 

Since the financial crisis, the BCBS has issued updated guidance on Pillar 2 and increased disclosure requirements under Pillar 3 to ensure there is more effective and consistent implementation by banks and regulators globally.

 

The course explains the requirements of Pillars 2 and 3, details the changes introduced by the BCBS, and explains their impact and implementation issues.

  • OBJECTIVES

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

    Explain the purpose of the three pillars approach adopted by the Basel Committee on Banking Supervision (BCBS)

    Describe the requirements for banks and regulators under Pillar 2 and the associated implementation issues

    Detail the disclosure requirements under Pillar 3 and the implementation challenges for banks

  • COURSE OUTLINE

    Topic 1: The Three Pillars Approach

    The Three Pillars

    o Pillar 1 (Minimum Capital Requirements)

    o Pillar 2 (Supervisory Review)

    o Pillar 3 (Market Discipline)

    Evolution & Implementation of the Three Pillars Approach

    Post-Crisis Enhancements

    o Supplemental Pillar 2 Guidance

    o Revisions to Pillar 3

    o Impact

    Topic 2: Pillar 2 Requirements & Implementation

    Pillar 2 Requirements

    o Principle 1 (ICAAP)

    o Principle 2(SREP)

    o Principle 3

    o Principle 4

    Pillar 2 Implementation

    o BCBS Guidance

    o Forward Capital Planning & Stress Testing

    o Implementation Issues

    • Risk Coverage

    • Capital is Not the Only Mitigant

    • Pillar 1 & Pillar 2 Overlap

    • Super Equivalence

    • Phase-In Period

    Topic 3: Pillar 3 Requirements & Implementation

    Pillar 3 Evolution

    Pillar 3 Requirements

    o Legal Entity

    o Frequency

    o Location

    o Validation

    o Regulatory Enforcement

    o From Basel I to Basel II

    Pillar 3 Disclosure versus Other Disclosure Requirements

    o Accounting Rules

    o National Laws & Regulations

    o Securities Listing Requirements

    Pillar 3 Implementation

    o Data Quality

    o Comparability

    o Timing

    o Effectiveness

    o Approach to Disclosure

  • PREREQUISITE KNOWLEDGE

  • ESTIMATED COMPLETED TIME

    60 Minutes

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