Basel Bank Capital Adequacy (Basel II, III, & IV)

Name: Basel Bank Capital Adequacy (Basel II, III, & IV)
Rating: 4.5 (180 reviews)

An Analysis of Basel II, Basel III, and Basel IV: Risk Measures, Capital Requirements and More

Created byMichael Oladejo

Last updated 8/2024

English

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What you'll learn

The concepts of capital adequacy under Basel I, II, III, and IV accords/frameworks and elaborate on the changes introduced by each framework.
Critical Analysis of the Basel Accords: Necessity, Advantages, and Shortcomings
The key financial regulations around Basel Capital Adequacy requirements by examining the roles of BCBS, EBA, PRA, OSFI etc., in implementing Basel requirements
The key attributes/parameters used in deriving Risk-Weighted Assets (RWA) for credit, operational, and market risk.
High-level analysis of the key changes introduced in Basel IV to Risk-Weighted Asset calculation for Credit Risk, Operational Risk & Market Risk.

Course content

24 sections • 93 lectures • 6h 41m total length

Introduction2:32
Explore Basel II, III, and IV capital adequacy frameworks, learn how banks calculate capital requirements, risk weights, and risk weighted assets, and understand why capital protects the financial system.

Introducing Basel II3:27
Basel II strengthens the international banking system by requiring capital for credit, market, and operational risks, organized into three pillars: minimum capital, supervisory review, and market discipline.
Highlights of the Basel II Framework3:42
Basel II enhances risk sensitivity by introducing three pillars: pillar one capital for asset risk, pillar two a robust risk management framework and supervisory review, pillar three public disclosures.
Basel II: The Three Pillars2:59
Introducing Pillar I3:47
A High-Level Summary of the Basel II Framework3:10
Introduction to Basel II Quiz

What is Regulatory Capital?4:55
Risk Weighted Asset & Capital Ratio4:41
What is Credit Risk?2:59
Basel II Credit Risk Quiz 1
Basel II: Standardized Approach2:44
Apply the Basel II standardized approach, using external ratings and regulatory risk weights for wholesale and retail exposures. Compare its simplicity with the internal rating-based method to enhance risk sensitivity.
Exposure to Sovereigns3:12
Exposure to Sovereigns Quiz
Exposure to Public Sector Entities3:09
Compare two risk weighting approaches for public sector entity exposures under Basel II–IV: sovereign-based weights by rating and long-term bank claim weights. Choose the approach based on each bank's circumstances.
Exposure to Public Sector Entities Quiz
Exposure to Multilateral Development Bank3:40
Exposure to MDBs Quiz
Exposure to Banks2:43
Exposure to Banks Quiz
Exposure to Corporates2:11
Explore two Basel risk-weighting options for corporates: external ratings with tiered weights, or a uniform 100% weight for all corporate exposures, noting insurance exposures are treated as corporates.
Retail Exposures2:19
Corporate and Retail Exposure Quiz
Residential & Commercial Mortgage Exposures3:52
Correction Note:
In the example on residential mortgage risk-weighting for a bank based in Ghana (a non-EEA country), the correct risk weight should be 55%, not 60%.

Calculation:
Risk weight = (Secured risk weight × 0.8) + (Unsecured risk weight × (LTV - 0.8)) / LTV

With:
Secured risk weight = 50%
Unsecured risk weight = 75%
LTV = 1.0
Risk weight = (50% × 0.8) + (75% × 0.2) / 1.0 = 40% + 15% = 55%
Residential and Commercial Mortgages Quiz
Past Due Exposures1:40
High Risk Exposures & Equity Exposures1:34
Covers Basel II to IV risk weighting for high risk exposures and equity, with 150% weights for sovereign and corporate exposures and 100% for diversified private equity and exchange-traded equity.
Past Due, High Risk & Equity Exposure Quiz
Original Exposure Calculation2:28
Original Exposure Calculation Quiz
Exposure Value Calculation4:31
Exposure Value Quiz
Credit Risk Mitigation3:26
Explain how banks calculate crm adjusted rwa under Basel II–IV using on-balance sheet netting, collateral, and guarantees, with ead, guaranteed amounts, and risk weights.
Credit Risk Mitigation Quiz

Internal Ratings Based Approach4:00
Asset Classes and Risk Components2:18
Basel II IRBF – Asset Class3:00
BASEL II IRBF: Probability of Default2:32
BASEL II IRBF: LGD & Maturity5:18
BASEL II IRBF Quiz 1
Basel II IRBF – EAD Calculation4:48
Key Input Fields for EAD Calculation1:41
Basel II – Calculation of Risk Weight & RWA under the Basel II IRBF7:26
Explain how Basel II IRBF computes risk weight and risk weighted assets by deriving correlation, maturity adjustment, and capital requirement, then applying scaling to obtain RWA.
Basel II IRBF – Mitigant3:23
BASEL II IRBF Quiz 2

Basel II IRBA – Asset Class3:38
Basel II IRBA – Probability of Default3:30
Map asset class and internal rating to the Basel II IRBA PD table to derive the probability of default, then apply it to calculate risk weights and RWA for wholesale and retail exposures.
Basel II IRBA – Loss GIven Default (Distinct)4:33
Basel II IRBA – Maturity3:17
Basel II IRBA – EAD Calculation2:17
Calculation of Risk Weight for Wholesale Exposures under IRBA3:31
Calculation of Risk Weight for Retail Exposure under the IRBA4:36
Key Input Fields for EAD Calculation under the IRBA1:36
Basel II IRBA – Expected Loss Calculation1:25
Calculate expected loss under Basel II IRBA using PD, LGD, and EAD. A €100,000 exposure with PD 0.02 and LGD 0.5 yields €1,000; next video covers exposures in default.
Basel II IRBA – Exposures in Default2:16
Basel II IRBA – Mitigation1:15
Basel II IRBA Quiz

Requirements

There are no prerequisites or requirements to take this course.

Description

This Comprehensive Basel Bank Capital Adequacy training program is designed to provide participants with a deep understanding of the Basel II, Basel III, and Basel IV capital adequacy frameworks. The program will cover the following topics:

The history and development of the Basel Accords
The different types of capital and how they are calculated
The risk weighting system and how it is used to determine capital requirements
The different Basel III standards, including the Common Equity Tier 1 (CET1) ratio, the Capital Adequacy Ratio (CAR), and the Leverage Ratio
The new Basel IV standards and how they are different from Basel III

The program will also discuss the importance of Basel Bank Capital Adequacy for the global financial system and how it helps to protect banks and depositors from financial crises.

Learning Objectives

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

Explain the Basel Bank Capital Adequacy framework and its objectives
Identify the different types of capital and how they are calculated
Calculate capital requirements under Basel II, Basel III, and Basel IV
Understand the significance of Basel Bank Capital Adequacy for the financial system

Prerequisites:

No prior knowledge of the Basel Bank Capital Adequacy framework is required.

Assessment

Participants will be assessed on their understanding of the course material through a series of quizzes and a final exam.

Who this course is for:

Anyone interested in learning more about regulatory reporting or building a career in financial services
Analysts
Risk Managers
Bankers
Investors
Regulators
Internal Auditors

Basel Bank Capital Adequacy (Basel II, III, & IV)

What you'll learn

Explore related topics

Course content

Introduction1 lecture • 3min

Basel II Framework5 lectures • 17min

Basel II Credit Risk16 lectures • 50min

Basel II: Standardized Approach Examples1 lecture • 13min

Basel II Internal Ratings Based Approach9 lectures • 34min

Basel II IRBF Calculation Examples1 lecture • 29min

Basel II Advanced Internal Ratings Based Approach11 lectures • 32min

Basel II Operational Risk2 lectures • 7min

Basel II Market Risk3 lectures • 8min

CIU Risk Calculation Examples1 lecture • 19min

Requirements

Description

Who this course is for: