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User Guide: Oracle Financial Services Basel Regulatory Capital IRB Approach Release 6.0.0.0.0
flag that is a part of the table Party Financial Info. Therefore, the two ways in which the application
identifies a financial entity are as follows:

The counterparty types are mapped as financial entities in the Rule. This Rule is re-configurable,
which the client can modify to add or remove counterparty types based on their interpretation of
the term “Financial Entity”. Based on this mapping the application identifies a financial entity.

The application selects a financial entity as per the Financial Entity Flag that is a part of table
Party Financial Info. Preference is given to this flag over mapping of counterparty.
If the counterparty is not a Financial Entity then the calculation of AVC remains unchanged.
However, if the counterparty is identified as a financial entity, then the application checks whether the
financial entity is a regulated entity or not.

Regulated Entity: the application checks whether the financial entity is a regulated entity or not
based on the downloaded flag that is a part of the table Party Financial Info. If the financial entity is
not a regulated entity then the application directly calculates the AVC using the correlation formula
and is populated in the column where the AVC was calculated previously. If the financial entity is a
regulated entity then the application checks for the group asset size.

Group Asset Size >= $100 billion: The application checks whether the regulated financial entity is a
part of a group with asset size of or equivalent to 100 billion USD. The group asset size can be in any
currency; however the asset size is converted to USD and should be equivalent to USD 100 billion or
more. If the application does not identify the counterparty as being a part of group asset size of greater
than or equal to USD 100 billion, then the calculation of AVC remains unchanged or else the AVC is
calculated using the correlation formula and is populated in the column where the AVC was
calculated previously.
Key Data Elements
A few key data elements for computation of Asset Value Correlation are provided in this section. For a
complete list of tables refer to the Download Specifications document.

Data that is populated helps the application identify each firm as financial and non financial entity.
With the data populated the application also identifies whether the financial entity is a regulated entity
or not. Additionally, for a regulated financial entity, the group asset size of the counterparty and the
currency pertaining to the asset size is also required.
Capital Buffers
Overview
There are three types of Capital Buffers are prescribed in the Basel III Accord which are as follows:

Capital Conservation Buffer

Countercyclical Buffer

Additional Loss Absorbency Capital (for G-SIB)
A detailed description of each of these buffers is provided in the following sections.
Capital Conservation Buffer (CCB)
The Basel III Accord requires banks to maintain Capital Conservation Buffer (CCB) out of Common
Equity Tier 1 Capital (CET1). This requirement is as per the transitional arrangement as stated in the Basel
guidelines.
Countercyclical Buffer
The Basel III Accord requires banks to maintain Countercyclical Buffer that is prescribed by the respective
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