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Regulatory Compliance
ICAAP
ICAAP is the globally-accepted term for the banking industry’s response to some of the provisions
of the second pillar (Pillar 2) of the Basel capital adequacy accord, Basel II. The SREP, meaning
the supervisory review process, has equally become the accepted term for regulators’ response to
regulated firms’ implementation of, among other things, Pillar 2. Generally
this interaction will take place on an annual basis, and if the ICAAP submission is not
well-received, may result in a supervisor’s instruction to a firm to increase the minimum amount
of regulatory capital held by that firm and/or other remedial action or sanction.
KnowCo consultants can assist financial institutions both in drafting the ICAAP
(including the identification and assessment of non-prescribed Pillar 2 risks) and in reviewing and upgrading
any existing ICAAP against the relevant risk management and assessment practices within that institution.
Our approach has resulted in successful ICAAP submissions, meaning submissions resulting
in little comment from the relevant supervisors and no requirement for additional Pillar 2 capital
(other than that which may have been proposed in the ICAAP submission).
ILAA and ILSA
See the information on the Liquidity risk management page
for details of our comprehensive ILAA and ILSA services.
Basel III and CRD III/IV
In the wake of the turmoil in the financial markets of 2007 – 2009 regulators (national and pan-national)
have sought to plug the gaps in their prudential frameworks so clearly exposed by the crisis.
The Basel Committee has announced radical reforms (‘Basel III’) to its capital adequacy regime and
these have been rapidly endorsed by the EU Commission into its series of capital requirements
directives, most latterly ‘CRD IV’.
Adoption of these reforms will be problematic and uneven, but will inevitably call for additional
investment by institutions already hard-pressed by an increasing compliance burden.
KnowCo personnel combine deep subject-matter expertise, in the technical aspects of both the
reforms and existing regulation, with a pragmatic, hands-on approach to implementation and
knowledge-transfer.
And KnowCo applications and strategic partnerships are designed to deliver cost-effective answers
to the ‘how-to?’ questions arising from Basel III and CRD III/IV.
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