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Asset Liabilities Management & Capital Management (Capital Management,…
Asset Liabilities Management & Capital Management
Capital Management
Objectives
ensure sufficient capital structures to support risk
meet credit rating & regulatory requirement
generate sufficient capital support asset growth
maintain investment grade
Approach
ICCAP
Pillar 1, Pillar 2 of Basel 2
backbone to support bank's strategy
monitor 3 key areas:
market condition, banking, Basel2,3 requirement
Capital Adequacy
Capital Requirement
maintain min. 8% RWCR
Basel I
Bael II
Capital Base
Tier 1 (Core)
fully paid up and permanently available
able to absorb losses
not represent fixed charge on earnings
Tier 2 (Sup)
contribute to underlying strength of bank
items not meet in tier 1
Limitation
amount Tier 2 not exceed TIer 1
Tier 2 limited to 50% Tier 1
Introduction
2 capital adequacy:
Risk-Weighted Capital Adequacy Framework
Islamic Banks
computation of min. capital required
3 broad categories:
general capital adequacy requirement
components of eligible regulatory capital
risk-weighted assets
Risk-Weighted Capital Adequacy Framework
Basel II-risk-weighted asset computation
applicable for banking institution adopt revised approaches
Basel I- given approval to migrate directly
Comparison between Conventional Bank & Islamic Bank
