What is the point of non viability?

What is the point of non viability?

To meet the point of non-viability trigger requirements, the instrument needs to be capable of being permanently written-off or converted to common shares at the trigger event. Temporary write-down mechanisms cannot meet this requirement.

How is RWA calculated?

RWA is a Risk-Weighted Asset. It is calculated by multiplying the exposure amount by the relevant risk weight for the type of asset or loan.

What are the three pillars of Basel 2 norms?

The Three Pillars of Basel II: Optimizing the Mix in a Continuous-time Model. The on-going reform of the Basel Accord relies on three “pillars”: capital adequacy requirements, centralized supervision and market discipline.

What goes CET1?

Common equity Tier 1 comprises a bank’s core capital and includes common shares, stock surpluses resulting from the issue of common shares, retained earnings, common shares issued by subsidiaries and held by third parties, and accumulated other comprehensive income (AOCI).

What does RWA mean in finance?

Risk-Weighted Assets
What Are Risk-Weighted Assets? Risk-weighted assets are used to determine the minimum amount of capital that must be held by banks and other financial institutions in order to reduce the risk of insolvency.

What does Basel III mean for banks?

Basel III is an internationally agreed set of measures developed by the Basel Committee on Banking Supervision in response to the financial crisis of 2007-09. The measures aim to strengthen the regulation, supervision and risk management of banks.

What is the difference between Pillar 1 and Pillar 2 capital?

The Pillar 2 requirement (P2R) is a bank-specific capital requirement which applies in addition to, and covers risks which are underestimated or not covered by, the minimum capital requirement (known as Pillar 1). A bank’s P2R is determined on the basis of the Supervisory Review and Evaluation Process (SREP).