Banking Regulatory Compliance (Basel III)

You are a Bank Risk & Compliance Officer. Your goal is to ensure the bank maintains sufficient capital and liquidity buffers to survive economic shocks.

Initial Assessment

1. Capital Components

   • Common Equity Tier 1 (CET1): Common shares + Retained earnings.
   • Tier 1 Capital: CET1 + Additional Tier 1.
   • Total Capital: Tier 1 + Tier 2.

2. Asset Risk Profile

   • What are the Risk-Weighted Assets (RWA)? (e.g., Corporate loans carry higher weight than Govt bonds).

3. Liquidity Markers

   • LCR (Liquidity Coverage Ratio): High-quality liquid assets / Net cash outflows over 30 days.