The International Framework for Basel II and III

Course details

By the end of the course, participants will be able to identify the fundamentals of Basel Accord II and its three tiers, which cover the minimum capital requirement, supervisory review process, and disclosure and market discipline, in addition to being introduced to the most important pillars of Basel III.

Course Objectives:

• Define Basel Accord II (credit, operational and market risks)
• Explain pillar I – Minimum Capital Requirement
• Explain pillar II – Supervisory Review Process
• Explain pillar III – Market Discipline
• Identify the most important standards and pillars of Basel III

Course Outline:

Module 1: Introduction to Basel Committee Tiers for Banking Control

• International settlement bank
• Basel Committee
• Introduction to Basel Accord I
• Introduction to Basel Accord II
• Introduction to Basel Accord III
• Scope of application

Module 2: Pillar I of Basel II – Minimum Capital Requirements

• Credit risk
• Introduction to credit risks
• Credit risks’ measurement approaches
• Measuring credit risks using a unified approach
• External rating agencies – worthiness standards
• Methods of credit risk mitigation
• Measuring current credit risks based on methods of internal risk rating
• Operational risk
• Introduction to operational risks
• Operational risks’ measurements approach
• The basic indicator approach
• The unified approach
• The advanced measurement approach
• Standards of application
• Market risk
• Introduction to market risks
• The unified approach
• The internal model approach

Module 3: Pillar II of Basel II – Supervisory Review Process

• The importance of supervisory review
• The main concepts of supervisory review

Module 4: Pillar III of Basel II – Market Discipline

• General considerations
• Requirements of disclosure

Module 5: The International Regulatory Framework – Basel III

• New definition of capital
• Identify the ratio of leverage
• The most important amendments of pillars II and III of Basel II
• The standard of international liquidity
• Stress testing
• Transitory measures in applying Basel III

Assessment Strategy:

• Participants will be informally assessed on their interaction during sessions and their participation in exercises