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Deloitte perspectives

Basel III: Transforming the bank


capital landscape

March 2011

Table of contents
What is Basel III

Basel III overview

Financial services industry impacts

23

Implementation considerations

32

Client focus Preparing for change

40

Why Deloitte?
A leader in bank capital

45

Americas contacts

51

As used in this document, Deloitte means Deloitte LLP and its subsidiaries. Please see www.deloitte.com/us/about for a
detailed description of the legal structure of Deloitte LLP and its subsidiaries.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

What is Basel III ?


Evolution of Basel III guidance
Scope of Basel III
Timeframe for Basel III implementation

Evolution of Basel III guidance


Basel III refers to guidance issued by Basel Committee for Banking
Supervision (BCBS) as a comprehensive response to the global credit crisis.
Basel II and Basel III, together, replace most elements of Basel I.
Basel III formalizes the April 2008 recommendations of the Financial Stability
Forum (FSF) and the G20's November 2008 action plan.
Also includes revisions to the market risk rules.
European Union (EU) Capital Requirements Directive (CRD) implemented the 2005
market risk rules, but the revisions were not incorporated in the U.S. rules.
EU will only have to implement additional changes to the market risk rules.

Relative to Basel II, international rules for


Basel III have been finalized
over a relatively short period.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Evolution of Basel III guidance (cont.)


Basel III development

Jul09 Dec09

Apr10

Jul10

Revisions to Basel framework


QIS
Capital and liquidity consultative papers issued
Quantitative impact study (QIS) conducted in early 2010
Revised Basel III guidance issued
Basel committee agreement announced in Sep.
Ratification at the G20 meeting in Seoul in Nov.
Final BCBS rules released mid-December 2010
Implementation timeframe occurs between
20122018

Sep10

Nov10 Dec10

QIS Results

Individual countries can now start the rule-making process


Several areas in the rules for local regulators/national discretion
Likelihood of divergences from Basel Committees final guidance
With international guidance largely finalized,
rule making in individual jurisdictions is
expected to be influenced by local
regulatory and political landscape.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Evolution of Basel III guidance (cont.)


Basel III final guidance consolidates several BCBS items
The core of the Basel III framework is revised capital standards, stronger capital
definitions, and systemic risk overlays along with a new international framework
for liquidity risk.
Principles for
Enhancements to the
Basel III framework

International
LRM framework

Revisions to Basel III


market risk framework

Strengthening the
resilience of the
banking sector

Guidelines for incremental sound liquidity risk


risk charge (IRC) calculation
management

Regulators
consensus July 26,
2010

Capital calibration
September 12, 2010

Requirements for liquidity risk, a subject of


debate over the years, makes it appearance
in Basel III, with possibly far-reaching
implications.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Scope of Basel III


Basel III is incremental to Basel II; together, Basel III and Basel II replace
Basel I.
Basel II implementation continues in the U.S with several core* banks in parallel
reporting.
The scope of Basel III is comprehensive and far reaching
Capital

Leverage ratio

Credit & market


risk

Liquidity risk

Capital Quality and transparency


Revised capital definitions to improve quality of capital, additional Buffers, and
enhanced minimum capital standards.
Leverage ratio
An international leverage ratio has been defined.
Basel III is not a replacement for Basel II
* Large U.S. Bank holding companies that meet the U.S. regulatory criteria for
the Basel II implementation

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Scope of Basel III (cont.)


The scope of Basel III is comprehensive and far reaching (cont.)
Credit and market risk revisions
Changes to counterparty credit risk rules, re-securitization exposures, use of external
ratings, etc.
Extensive revisions to market risk rules incremental risk charge (IRC), stressed
value at risk (VaR), and trading book securitizations.
Liquidity risk
A new framework for liquidity risk measurement, standards, and monitoring.

Several provisions of the Dodd-Frank legislation may shape U.S. regulatory


standards for common Basel III elements.

Systemic risk (systemicly important financial institution or SIFI) designations


Orderly liquidation authority (living wills)
Volcker rule on proprietary trading
Collins amendment on bank capital
Credit retention requirements on securitizations
In the U.S., the Dodd-Frank legislation will
Credit rating agencies regulation
impact implementation of Basel III.
Derivatives clearing
Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Time frame for Basel III implementation


All dates as of Jan 1

2011

2012

2013

Regulatory adjustments to
common equity

2014

2015

2016

2017

2018

2019

20%

40%

60%

80%

100%

100%

Capital instruments that no


longer qualify

Phased out over 10 yrs, beginning 2013

Capital conservation buffer

0.625%

1.25%

1.875%

2.50%

Minimum common equity


capital ratio1

3.5%
(3.5%)

4.0%
(4.0%)

4.5%
(4.5%)

4.5%
(5.125%)

4.5%
(5.75%)

4.5%
(6.375%)

4.5% (7.0%)

Minimum Tier 1 capital1

4.5%
(4.5%)

5.5%
(5.5%)

6.0%
(6.0%)

6.0%
(6.625%)

6.0%
(7.25%)

6.0%
(7.875%)

6.0% (8.5%)

Minimum total capital1

8.0%
(8.0%)

8.0%
(8.0%)

8.0%
(8.0%)

8.0%
(8.625%)

8.0%
(9.125%)

8.0%
(9.875%)

8.0% (10.5%)

3%
(Parallel
run)

3%

3%
(Disclosure
starts)

3%

Leverage ratio

Liquidity coverage ratio

Supervisory monitoring
Observation
period

Net stable funding ratio

Start
Observation
period

Market risk-weighted assets


(RWA) changes

Start

Credit RWA changes

Start

1Amount

Start

in bracket includes conservation buffer

Initial implementation date for target minimum capital and leverage ratio
Final level of capital ratios including conservation buffer

3% (reMigration to
calibration)
Pillar 1

Many banks have already announced strategic actions to


mitigate adverse capital impacts from Basel III, and intent to
meet targets in advance of deadlines.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III overview


Capital
Leverage ratio
Market and credit risk revisions
Liquidity framework

Capital

Shift in regulatory mindset

More Capital

Stronger
capital

Buffer for
stress
conditions

Macro
prudential
overlays for
system risk

Counter
cyclical buffer

More capital, i.e., higher minimum capital standards.

Increases minimum capital ratios for Tier 1 and Tier 1 common, while Tier 2 remains same.

Many banks received public sector support to avoid failure.

Losses were borne by the common equity holders, and not other Tier 1 and Tier 2 components.

Basel III is designed to require that common equity is the dominant component of capital, other regulatory
capital instruments are converted into equity, if a bank is deemed non-viable.

Capital conservation buffer of 2.5% to withstand future periods of stress.

Regulators can impose restrictions on banks ability to distribute earnings, i.e., dividends, share
buybacks, when capital levels fall below buffer.

Supervisors may impose time limits on a bank to exit the buffer range.

Additional macro-prudential overlay to address Systemic risk: risk of financial system disruptions
that can impact the broader economy.
A capital overlay of 0 2.5% can be imposed to dampen excessive credit growth.

Objective is to reduce pro-cyclicality.

Buffer would build up during periods of excessive credit growth, and can be released during a down cycle.

Applied to largest financial firms that are interconnected due to common exposures, and pose
disproportionate level of systemic risk.

National supervisors to establish systemic capital surcharge, recommended range 03%.

SIFI surcharge

Tier 1 Common equity requirements for the


largest banks in some jurisdictions could
approach double digits.

10

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Capital

Basel III capital measures focus on quality and


transparency
Strengthening the definition of capital, focusing on
Exclusion of several instruments from Tier 1
its overall quality, consistency, and transparency.
capital may alter the capital structure
at many banks.
Higher capital standard that promotes long-term
stability and sustainable growth.
Tier 1 Going-concern capital
Regulatory capital must be simple and
Predominantly common equity.
harmonised across jurisdictions.
High-quality capital capable of absorbing losses.
Components of capital
Tier 1 capital strengthened

Subordination to all claims in liquidation, no repurchase


obligation or mandatory dividend, etc.

Noncommon equity criteria: senior and distribution


preference only to common equity; callable only after five
years; principal repayment subject to regulatory
approval, etc.

Tier 2 capital simplified


Tier 3 capital abolished

Tier 2 Gone-concern capital

A full reconciliation of regulatory capital


elements back to the balance sheet in the
audited financial statements is required.
11

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Subordinate to depositors and all creditors; cant be


secured or covered by issuer guarantee; callable after
five years; no accelerated credit feature.

Restriction that Tier 2 cannot exceed Tier 1 is eliminated.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Capital

Tier 1 capital What is in and what is out


Tier 1 Capital
Common equity will be the predominant form of Tier 1, with specific minimum
requirements.
Perpetual preferred stock can remain in Tier 1.
Tax advantaged hybrid securities mostly excluded.
Step-up convertibles (due to incentives to redeem, else rates go up).
Cumulative preferred (due to full access to cancelled dividends).
Trust preferred (due to maturity date, payments are noncancellable and lack of loss
absorption).

While Basel II scope in the U.S. is limited to


core banks only, Basel III changes in
capital definition, deductions, and filters
should apply to banks more broadly.

12

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Capital

Tier 1 capital What is in and what is out (cont.)


Tier 1 and Tier 1 common adjustments
A series of adjustments and filters are applied to book equity to determine Tier 1
common equity; Some, of the adjustments are similar to those under Basel I.

Deferred tax assets


(DTA)

Investments in financial
institutions

AFS unrealized gains


and losses

Allowance for loan and


lease losses
vs. ECL
Limited to 10% individually
And 15% in aggregate

Mortgage servicing
rights (MSR)

Goodwill and other


intangibles
Fair value option changes
due to own credit risk

Defined benefit pension


assets
50/50
deductions
Minority Interest

Deducted from Tier 1 common

Nonfinancial equity
investments
Insurance subsidiaries

Similar to current adjustments

Individual and aggregate limits on inclusion


of certain items from Tier 1 may have
significant implications for U.S. banks

13

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Leverage
ratio

Leverage ratio is introduced as a supplementary


measure
As part of Basel III framework, a nonrisk-based leverage ratio is introduced as a
supplementary measure or a backstop to the risk-based capital (RBC) ratios.
The objective of leverage ratio is to constrain the build up of leverage in the
system, irrespective of risk sensitivity.
Tier 1 capital
Leverage ratio

=
Gross exposure

Leverage ratio requirements have been


in place in U.S.; hence this may not
pose issues for U.S. banks, and in light
of high common equity targets.

Minimum leverage ratio is set at 3%.


Gross Exposure includes on balance sheet assets (book value) and off balance
sheet times translated to balance sheet equivalent.
Unused credit card commitments converted at 10%, all other commitments at 100%.

In contrast to Europe, U.S. banks have traditionally been subject to a leverage


ratio requirement.
Credit card banks and trading operations are more adversely affected by
leverage measure.

14

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Credit and
market risk

Market and credit risk revisions


Revisions to Basel II framework were intended to eliminate capital arbitrage
between the banking book and trading book, and significantly expand
capital charges for certain products, practices, and activities.
Inclusion of Stressed VaR in internal models approach.
Banking book risk weights for securitization exposures in the trading book.
Market risk revisions

IRC for credit risk from default and migration.


Market risk capital can possibly
increase by 24 X leading to smaller
trading book.

Higher asset value correlation multiplier for exposure to large, or unregulated, financial
firms.
Credit risk refinements

Enhance methodologies to calculate counterparty


credit risk (CCR), and CCR management
practices.
Higher risk weights for re-securitization exposures.

Significant credit risk capital


increases for securitizations and
capital market products are likely to
lead to reduced activity and squeeze
profitability.

Reduced reliance on external ratings.


Pillar 2 and 3 changes

15

Enhanced governance of securitization related risks, compensation practices, etc.


Detailed disclosure of securitization activities.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Credit and
market risk

Market risk background and evolution


In 1996, BCBS published amendment to the 1988 Basel I capital accord to
incorporate market risk rules. The Market Risk Amendment finalized in 1997,
introduced two key approaches to capture market risk for trading positions:
Standardized measurement method
Internal Models Approach (IMA)

U.S. rule making on market risk has


been slower relative to Europe.

Market risk rules were again revised in 2005 to


incorporate the following changes:
Enhancements to the treatment of specific risks, including the introduction of
incremental default risk
Specific capital treatment for failed and unsettled transactions

16

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Credit and
market risk

Market risk background and evolution (cont.)


In 2009, BCBS published revisions to the market risk framework in response to
the financial crisis which have now been incorporated in Basel III for
implementation by 2012. Key changes include:
Introduction of IRC to capture
U.S. rule making on market risk has
default and migration risk under IMA for unsecuritized
been slower relative to Europe.
products.
Banking book charges for specific risk of securitization exposures in the trading
book.
Introduction of stressed VaR measure in addition to existing VaR calculations.
Conservative treatment of correlation trading portfolios.
Increased frequency of data updates from every three months to monthly.
More stringent guidance around treatment and valuation of illiquid positions.

The 2005 changes were implemented in Europe as part of Basel II, but not
in the U.S.
U.S. Regulators issued market risk Notice for Proposed Rulemaking in December 2010,
which consolidates the 2005 BCBS rules with the 2009 revisions.

17

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Credit and
market risk

Stressed VaR and IRC will likely lead to much higher


capital for market risk
Stressed VaR

Incremental risk charge


IRC definition

The 12-month stress period likely corresponds to


2007-08 period with extreme volatility and large
losses.

Captures potential for loss from an obligors default


and credit migration risk.
IRC scope

Capital
charge

Current formula

Add on stressed VaR


capital charge

Positions subject to interest rate risk under IMA


approach, excluding securitizations and credit
default swap.
Requirements Highlights

Multiplication
factors may be
different
3 mb
m3

VaR

Multiplication
factor mb
Current

Stressed VaR

Multiplication
factor m

Newly
introduced
capital charge

VaR

Multiplication
factor mb

Measured at 99.9% confidence level over one year


horizon considering market liquidity.

Liquidity horizon has a floor of three months

Includes correlations in default and migrations


among borrowers, but excludes diversification with
other trading positions.

Incorporates issuer and market concentration risks.

Extensive model validation requirements related to


design, testing and maintenance, with emphasis on
stress testing, scenario analysis and sensitivity
analysis.

Revised

VaR is measured over a 99% confidence interval


over a 10-day period.

18

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Credit and
market risk

Credit risk changes impact securitizations and


counterparty risk
Significant revisions to Basel II framework for securitizations were finalized in July 2009 impacting all three pillars. The
December 2010 publication finalizes changes to counterparty credit risk rules. All changes are targeted for implementation
by December 2011. Key provisions are summarized below:
Resecuritizations defined to include collateralized debt obligations (CDOs) and liquidity facilities to asset-backed
commercial paper programs, and higher risk weights established.
Banks not permitted to use external rating that benefit from self guarantees. Such exposures in the trading book have a
capital requirement no less that that when held in the banking book.

Securitizations

Must perform credit analysis of securitization exposures instead of solely relying on rating agency conclusions.
Banks must have continuous access to up-to-date performance information for all underlying pools of their securitization
exposures, both in banking or trading book.
Very conservative treatment for securitization liquidity facilities.
Eliminates favorable treatment for market disruption liquidity facilities.
Inputs for counterparty credit risk (CCR) capital to be based on stressed inputs, so EPE calculations to include data
reflecting periods of stress.
Improve exposure at default (EAD) calculation to promote more robust collateral management practices.

Counterparty
credit risk

Higher asset value correlation for exposures to large (>$100Bn), or unregulated, financial firms.
Extend margin period of risk for transactions to large netting sets
Includes capital add-on charge for potential mark-to-market losses, i.e., credit valuation adjustments (CVA).
Include an explicit capital-charge under Pillar 1 for specific wrong-way risk.
Increase incentives for firms to use clearinghouse counterparties, which get a nominal RWA.

Other changes cover Pillar II and III and include items such as more rigorous stress testing and validation standards,
more active monitoring of concentration risks, and inclusion of any incremental securitization risks in Pillar II,
increased disclosure requirements related to sponsorship of off balance sheet vehicles, and conduit programs.
19

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

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Liquidity risk

Basel III introduces global standards for liquidity for the


first time
The core of the framework consists of two liquidity measures calibrated to
address stressed conditions.
These ratios have been developed to achieve two separate but complementary
objectives.
Liquidity coverage ratio
Objective is to promote short-term resiliency with sufficient high-quality liquid
resources.

Net stable funding ratio


Objective is to promote medium-and-long term resiliency by creating additional
incentives for funding with more stable sources.

The framework also proposes four metrics for liquidity monitoring

Contractual maturity mismatch


Funding concentration
Available unencumbered assets
Market-related monitoring tools (not bank specific)

Public disclosure
20

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Global liquidity standards that have been


finalized with Basel III have the potential to
alter the cost and structure of bank funding.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Liquidity risk

Liquidity coverage ratio


Liquidity coverage ratio (LCR) has a very short-term focus and is based on cash
flow perspectives.
LCR

Stock of high-quality
liquid assets

100% over 30 day time horizon

Net cash outflows

LCR defines level of liquidity buffer to be held to cover short-term funding gaps
under severe, but plausible, stressed conditions.
Assets considered for inclusion are high-quality liquid assets with haircuts for
each category.
Net cash outflow is calculated using supervisor-defined haircuts that are applied
to each category of liabilities, contingent liabilities, and receivables.
A categorization scheme is provided
Liabilities (stable deposits, less stable deposits,
unsecured wholesale funding, etc.).
Receivables (retail inflows, wholesale inflows,
repos/reverse repos inflows, etc.).
21

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Many large global banks have indicated that


they currently fall short of the Basel III
liquidity standards, which was confirmed by
Basel Committee QIS results.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Liquidity risk

Net stable funding ratio


Net stable funding ratio (NSFR) is a medium-to-long term measure and has a
balance sheet focus.
NSFR

Available amount of
stable funding

100% over 1 year

Required amount of
stable funding

NSFR defines minimum acceptable amount of stable funding in an extended


firm-specific stress scenario.
Amount of stable funding is defined as various categories of funding sources,
and their applicable haircuts.
e.g. capital, stable retail deposits, less stable retail deposits, etc.

Required stable funding is calculated by applying fixed factors to various defined


categories of assets and contingent liabilities.
NSFR was recalibrated in the BCBS final rules.
e.g., cash, loans and securities with maturities < 1 year,
marketable securities, etc.

22

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Many European banks with large retail


deposit franchises, may be slightly better
positioned than U.S. counterparts.

Copyright 2011 Deloitte Development LLC. All rights reserved.

Financial services
industry impacts
Key areas of impact
BCBS QIS summary
Basel III international comparisons
Expected industry trends in
response to Basel III

Basel II
impacts

Basel III has significant potential implications for banks


Due to its broad scope and reach, Basel III is expected to have a transformative
effect on the banking industry landscape, especially the large, global institutions.
For these firms, Basel III will likely impact:
Strategic decisioning
Tactical near-term choices
Infrastructure and operations

Some potential implications from the evolving bank capital regulatory standards
are shown below:
Return on equity
cost of capital

Simpler capital
structure

TB and BB
securitizations

Wholesale short-term
funding costs

Pricing for trade


finance products

Clearinghouse
settlement volumes

OTC, CDOs,
repos, PB, and
correlation trading

Collateral and
margin

Financial cross
holdings/ownership

Credit card limits,


home equity lines and
personal LOCs
Competition for retail
demand and term
deposits

Inter-bank
transactions

Large
banking
mergers

Rating agency role


and influence

Fee-based businesses

Off balance sheet


products such as
guarantees and
contingent credit lines
Mortgage servicing
rights

The extended implementation timeframe allows for an orderly approach to


transition to target state.
24

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Results of Basel Committee Quantitative Impact Study


BCBS conducted a comprehensive study to understand the impact of the Basel
III guidance, including changes to RWA from market risk and credit
risk revisions.
Results summarized for Group 1 (i.e., international banks with greater than 3
billion euros in Tier 1 capital as of Q4 2009) and Group 2 banks (all other
participating banks).
13 U.S. banks were included in the study, all Group 1

Basel III rules applied on a pro-forma basis assuming full implementation based
on December 31, 2009, data.

Large, internationally active banks with


sizeable capital markets portfolios have the
potential to be adversely affected by Basel
III, according to the BCBS QIS.

25

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Results of Basel Committee Quantitative Impact Study


(cont.)
Highlights of QIS study and key findings
Large global banks far more adversely effected than smaller banks; this result is
consistent for capital ratios, leverage ratio, liquidity ratios and RWA changes.
For Group 1 banks, Common equity Tier 1 (CET1) ratio drops from 11.1% to 5.7% when
Basel III definition of capital used, and filters and deductions applied, to common equity,
along with RWA changes due to market risk and credit risk revisions.
Relative to 7% CET1 standard, banks have a shortfall of $577 billion to be addressed
through 2019. BCBS noted that net income after taxes at Group 1 banks for 2009 was
209 billion euros.
Average leverage ratio for large banks was 2.8% while smaller banks, at 3.8%, were
well above minimum requirement of 3%.
Liquidity ratio requirements create a significant funding shortfall for large banks.
RWA goes up significantly for Group 1 banks with large trading operations and
securitization exposures.
Capital ratios are adversely impacted under
Basel III due to changes in capital definition
along with increases in risk weighted assets.

26

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Group 1 banks results summary

Current*

Sample
average (as of
Dec 31, 2009)

Minimum
requirement

Common equity
Tier 1

11.1%

5.7%

7.0%

Tier 1 capital

10.5%

6.3%

8.5%

Total capital

14.0%

8.4%

10.5%

2.8%

3.0%

83%

100%

1.73 tln

Liquidity**-NSFR

93%

100%

2.08 tln

RWA

+23%

Basel III item

Leverage ratio*
Liquidity**-LCR

Key drivers
Goodwill, intangibles, financial cross holdings, and
15% limit on DTA/MSR/Investments

577bln^

Cancellable lines, potential exposure


Outflows to unsecured Fis, collateral,
securitizations, etc.

CCR, sVaR, IRC securitization

Breakdown of increase in RWA (+23%)

8%
7%
6%
5%
4%
3%
2%
1%
0%

^ Tier 1 and total capital shortfall should


be less than CET1, and easily addressed
by meeting CET1.
* Leverage ratio requirement can be
exceeded easily by meeting CET1
standard.
** Liquidity shortfall for LCR and NSFR
not additive.

Definition of
Capital

27

Estimated
shortfall
(Euros)

Counterparty Securitization Stressed VaR Equity Std IRC & Trading


Credit Risk Banking Book
Measuremet Book Securzn
Method

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Basel III international comparisons


Credit Lyonais Securities Asia (CLSA) analyzed the Basel II impact using more
recent financials, and included the effects from mitigation actions already
announced by several banks.
The study compared Basel III impacts across a set of 44 banks (16 global, 24
regional) across U.S., Europe, and Asia.
Large global banks

Regional banks

Current

Basel impact*

Current

Basel impact*

U.S.

10.3%

7.4%

9.6%

7.8%

Europe

9.2%

7.1%

8.3%

8.0%

Asia

12.5%

10.5%

11.0%

Total

10.0%

7.6%

9.4%

7.9%

Results are directionally consistent with Bank for International Settlements study.
While global institutions have higher capital ratios than regional banks, their
decline in CET1 ratio is much higher than that for regional banks
(240 bps vs. 150 bps).
Source: CLSA (Credit Lyonais Securities Asia) U.S. banks sector outlook, Nov 5, 2010,Basel III International comparisons used with permission

28

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Basel III international comparisons (cont.)


Asian banks appear to be better positioned from capital standpoint to absorb
Basel III changes.
U.S.-based global banks are more impacted (290 bps) than their Asian or EU
counterparts (200 bps and 210 bps decline, respectively).
Current common equity capital at U.S. banks are higher than European banks, likely
due to capital raised in 2009 following Feds SCAP/stress testing initiative results.

Source: CLSA (Credit Lyonais Securities Asia) U.S. banks sector outlook, Nov 5, 2010,Basel III International comparisons used with permission

29

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Expected industry trends in response to Basel III


As a result of Basel III and other regulations (e.g., Dodd-Frank in U.S), banking
will be more heavily regulated.
We can expect a trend towards simplicity in balance sheet composition and
simpler capital structure.
Due to significantly higher capital requirements, capital markets trading and
structured finance transactions may see reduced levels of activity and a squeeze
on profitability.
With greater volumes of over-the-counter derivatives cleared through centralized
counterparties such as exchanges (given favorable capital charges) will continue to add
pressure on profitability.

Banks will likely be less inclined to use various forms of off balance sheet
financing and investment vehicles due to implications for capital, leverage, and
liquidity.
It is conceivable that some of these volumes are directed to unregulated segments of
the financial services industry.
With stronger capital and liquidity measures,
large global banks can be expected to have
more stable and predictable earnings
stream, and may be less prone to
boom and bust cycles.
30

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Basel III
impacts

Expected industry trends in response to Basel III (cont.)


Retail deposits as a share of overall funding for large global banks will likely
need to increase to meet liquidity standards.
Competition for retail deposits may be spurred, and may lead to acquisitions of small,
niche banks with local deposit share.
The low-interest rate environment may encourage banks to lock in longer-term funding
through debt markets.
Short-term wholesale funding markets such as brokered CDs and commercial paper
may be adversely impacted with lower liquidity and higher spreads.

An acceleration in trends is likely towards fee based businesses such as wealth


management and private banking due to lower capital charges
Various forms of mortgage credit may see tighter lending standards and a return
to traditional products and collateral requirements. Fees and pricing for home
equity lines and credit cards is likely to increase.
Dividend payout ratios should stabilize, but at levels below the pre-crisis levels.
Basel III greatly increases the
attractiveness of retail deposits as the
preferred form of bank funding.

31

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Implementation
considerations
Program management
Risk management
Corporate treasury
External reporting

Change to
Program
management

Basel III may impact bank infrastructure in several


dimensions
Basel III implementation may impact several aspects of a banks infrastructure and operations, especially:

Risk management (especially risk functions supporting capital markets and structured finance)
Corporate treasury
External reporting

Institutions may be well served to remember the lessons from Basel II implementation, where costs and complexity
significantly exceeded expectations resulting in huge budget over-runs and above-plan spend.
Our Basel II observations

Our perspective on Basel III applicability

Lack of end-to-end implementation perspective covering business, data,


technology, process, analytics, and reporting.

Program management

Design, structure, and role of project management office (PMO) underwent


several iterations.

Critical to consider establishing a top down, end-to-end view of the program for all
stakeholders (business, risk, treasury, reporting).
Program management

Traditional operations centric PMO were not very effective.

PMO should serve as the Requirements Clearinghouse balancing


considerations of business/risk, technology, regulatory expectations, and
executive management.

Excessive reliance on subject-matter experts to influence


program direction.

Basel II domain expertise, understanding of industry/peer bank approaches, and


regulatory trends in the PMO can be important.

Inability of PMO to manage and contain scope.

PMO should manage scope aggressively in face of rationalization from business


and information technology.

Basel II also exposed limitations of large complex organizations in many respects


Limitations to cross functional collaboration

Communication strategy must again address the core and extended


stakeholders.

Misalignment of objectives between business and technology

Front office, middle office and back office

Ownership and accountability for requirements

Training and education is core part of communications

Excessive focus on some narrow areas left large components without focus and
plans till late in the game
Data quality
Traceability of requirements
Risk exposure to general ledger reconciliation

A structured approach to planning and governance


Early focus on data definitions, data governance and data quality.
Clear definition of ownership and accountability.
Detailed upfront project planning.
Establish and enforce standards.

Sustainability model

33

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Risk
management

Risk management infrastructure at the largest banks is


responding to change
Regulations, such as Basel II, Dodd-Frank (Volcker rule, Collins Amendment,
etc), stress testing, etc.
Regulatory information requests, horizontal and targeted exams.
Technology integration from mergers and acquisitions activity that occurred during credit
crisis and impacted several large financial firms.
In the U.S., newly formed bank holding companies are transitioning to a very different
regulatory landscape.
Core investments in risk infrastructure/technology/reporting that were deferred.

Given the myriad of regulatory initiatives,


flexibility, and adaptability may be key from
a risk management infrastructure
standpoint. .

34

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Risk
management

Risk management data and operational challenges


Basel III rules introduces a variety of new data, analytical, and technology
requirements.
Guidance disproportionately impacts areas already undergoing significant changes such
as derivatives and securitizations.
Significant requirements around collateral, risk management, stress testing, and model
validation that are difficult to implement and maintain.
Requirements for IRC are both analytically and operationally intensive, although current
processes and systems may be extended for sVaR calculations.
Requirements to produce an additional set of effective expected positive exposure
(EEPE) based on stressed conditions is likely to be both systems and human resource
intensive.

Computation of leverage ratio based on varying local accounting rules at the


legal-entity level and harmonization at parent level for large internationally active
banks could be operationally challenging.
Implementation of credit and market risk
RWA rules by 2012 will likely impose
significant costs, and be associated with
implementation and compliance risks.

35

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Corporate
treasury

Considerations for corporate treasury


A number of Basel III requirements capital, liquidity standards (LCR and
NSFR), leverage ratio are core to corporate treasurys strategic and functional
role in a bank.
Strategic considerations
Active role in capital management including capital structure, cost of capital,
distributions, etc.
Long-term funding and liquidity management strategies, with flexibility to refine and
react to market.
Much tighter integration of treasury with business strategy and plans, with capital
implications addressed proactively.
Alignment with risk management due to dependencies such as limit management,
collateral, and exposure management, etc.

While capital- and liquidity-related changes


are significant, the level of investment for
infrastructure enhancements should be
lower than costs associated with Basel II.

36

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Corporate
treasury

Considerations for corporate treasury (cont.)


Operational considerations
Treasury data, systems, processes, analytics, and reporting will likely require significant
enhancements.
Stressed liquidity ratios will likely require new data and system feeds, mapping and
categorization efforts, reconciliation to accounting books, and harmonization across
jurisdictional requirements.

Sustainable operational processes to support external disclosure and regulatory


reporting requirements around liquidity and capital will likely require a change in
mindset.
Treasury processes and reporting serve internal management (and board) needs such
as interest rate risk management, liquidity, and capital planning/management.
Recent regulatory requests relating to capital adequacy assessment, stress testing, etc.,
have been addressed largely through ad hoc and one-time efforts.
ALM systems may be subject to higher level of change management and controls.
Formal monitoring and reporting requirements
Addressing data quality and operational
relating to maturity.
requirements for treasury are expected to be
substantive.

37

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

External
reporting

Changes in external reporting are evolutionary


Basel III increases reporting and disclosure requirements, which may continue to
pressure bank functions involved in regulatory reporting/external reporting.
However, some reporting requirements (leverage ratio, capital, funding mismatch, etc.)
could be able to leverage existing processes and infrastructure.

External reporting is typically downstream of most applications where the


disclosure information is derived, aggregated and assimilated.
Basel II reporting and disclosure required close coordination between risk management
and regulatory reporting.
Basel III could enhance coordination and collaboration of Regulatory Reporting with
treasury.

Significant disclosure requirements relating to counterparty exposures and


securitizations will rely on risk management to provide the data and analytics;
the existing Basel II reporting processes may be enhanced to address these
requirements.
Meeting enhanced disclosure and reporting
requirements is expected to be less
challenging than other aspects of Basel III.

38

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

External
reporting

Changes in external reporting are evolutionary (cont.)


Reporting of newly defined capital components may not pose additional
complexities, as it will likely continue to be general ledger-based, and tightly
integrated with financial reporting.
The elimination of 50/50 deductions from Tier 2, and change in approach to incorporate
deductions related to risk exposures in the RWA computations, in effect simplifies some
aspects of calculation of regulatory capital measures.

Existing bank processes relating to interest rate risk management and liquidity
management may be able to support Basel III reporting and disclosure
requirements, with some enhancements.
While the BCBS leverage ratio requirement has some differences to the current
U.S. definition, information on incremental items (such as credit card lines, EPE,
etc.) can be obtained from Basel II sources.

For Basel III reporting, synergies with Basel


II data, and reporting infrastructure must be
actively explored.

39

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Client focus Preparing


for change
Assessment and analysis
Planning and design
Strategic implications

Assessment
and analysis

Preparing for change


The long timetable for Basel III implementation allows for methodical planning
and preparation for the Basel III target state.
13 U.S. banks participated in BCBS QIS in early 2010, and others have assessed
impacts of Basel III.
Several large banks have already announced plans to mitigate an adverse impact on
capital and liquidity from Basel III.
Practically, we expect investors and regulators to influence banks to adopt revised
capital standards well in advance of the Basel III timelines.
However, the extended timeframe could also induce complacency for some institutions
which may chose to push out implementation efforts.

Interdependencies and linkages across capital markets, risk management,


corporate treasury, and external reporting make Basel III implementation
complex, though less invasive as Basel II.
Individual requirements for calculations (excluding credit and market risk RWA) on the
surface likely be manageable
Delay in final rules and inadequate
planning adversely affected Basel II
Early focus on dependencies can help mitigate
programs. Basel committee final rules
execution risk
provide a reasonable foundation to
initiate program design and
programming for Basel III.
41

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Assessment
and analysis

Preparing for change (cont.)


Preparations for Basel III should be considered in different stages.
Strategic actions for balance sheet composition, funding, capital management, and
business planning necessitate a solid understanding of issues and robust action plan.
Execution of business strategies and changes to funding mix, liquidity profile, or
capital structure can also depend on macro variables, competitive environment,
market conditions, and business opportunities; as such, some may take several years
to accomplish.
Initial planning, PMO set up and design activities in preparation of U.S. rule making.
Detailed planning and requirements, execution and testing.

Advanced planning, program management,


and end to end requirement definitions are
critical for a successful and cost effective
implementation.

42

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Assessment
and analysis

With BCBS rules finalized, clients should consider a


variety of activities in preparation for U.S. Basel III rules
Pro-forma
assessment and
scenario
analysis

Detailed pro-forma assessment of capital, liquidity, and leverage ratio impacts from BCBS rules
(December 16, 2010) [Update BCBS QIS from 2009 may be used].
Projections of capital and liquidity measures, along with market-based scenario analysis.
Identification of significant issues and shortfall drivers for Basel III items.
Results analysis, issue identification, and strategic assessment of choices/options.
Catalog and prioritization of actions for the short, medium and long term.

Basel III
business and
capital strategy

Senior management buy in, endorsement and sponsorship.


Mitigation action plan with agreement of timeframe and assignment of accountability.
Analysis of various capital and liquidity levers, and sensitivities, simultaneously leading to optimal
balance sheet composition and capital structure
Establish PMO and associated governance structure for Basel III execution.

PMO design and


set up

Define protocols for interactions with key stakeholders (e.g., board, steering committee, business
executives, internal audit, regulators, etc.).
Establish work threads with clear accountability, and define approach to manage requirements with
coverage across data, process, technology and business.
Develop a high-level program roadmap and develop materials for stakeholder/senior management
education, support, and buy-in.

Program road
map and highlevel design

Data requirements and source map Assessment and analysis of potential sources for broad
sets of data requirements.
Develop top down end -o-end logical design for Basel III liquidity framework solution, and identify
leverage points of integration with Basel II infrastructure.

43

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Strategic
implications

Basel III may necessitate close alignment of business strategy with


capital planning, funding decisions and liquidity management

Basel III requirements require careful consideration of several factors, and banks may be advised to develop detailed action plans in line with
organizational strategy goals and objectives.

Integration of business strategy with capital plans along with consistent funding approach can be critical as shown below.

Clients may be advised to pay attention to related Dodd-Frank provisions and evolving accounting standards.
Business strategy

Funding and liquidity management

Target size of capital markets and structured


finance businesses

Funding sources: wholesale vs. retail


funding

Business mix of proprietary risk taking vs.


market making

Funding maturity: short term vs. long


term

Role of strategic equity investments and


partnerships
Market opportunities for expanding asset
management, investment banking, and other
less capital intensive businesses
Disposition of nonstrategic, capital-consuming
portfolios and businesses
Role of mortgage banking products and
services; own vs. securitize

Business
strategy
Basel III

Funding
and
liquidity

Long-term debt issuance instruments,


timing, and cost
Expansion of retail deposits through
pricing, promotions, internet banking,
branch acquisitions, etc.
Contingent sources of liquidity

Capital
Dodd-Frank provisions

Pricing and appetite for trade finance and


merchant banking products

Collins amendment
Capital planning and optimization

Systemic risk regulation

Retirement of tax advantaged hybrid instruments

Orderly liquidation authority


(Living Will)

Accounting considerations

Target plans for earnings retention, payout ratios and


capital repurchases

Loan loss provisions

Coordination with business and accounting functions to


optimize levels of capital deduction items

Rules for netting of derivatives and


repos

Investment portfolio strategy (AFS vs. HTM) to limit


capital volatility

FAS 166/167 SPV consolidation

Manage capital buffers to enable stable dividend policies

FASB vs. IFRS differences

44

Derivatives clearing
Bureau of consumer protection

Consider role of bail-in capital


Optimize across capital, leverage, liquidity and
concentration considerations economic and regulatory

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Volcker rule

Credit ratings (NSRSO)


Credit risk retention rules

Copyright 2011 Deloitte Development LLC. All rights reserved.

Why Deloitte?
A leader in bank capital
Global footprint
End-to-end service capabilities
Marketplace eminence and
thought leadership

Global
footprint
heading

Deloitte in financial services


Deloittes global breadth and depth

Global Financial Services Industry organization

One of the largest professional services organization in the world,


with 169,000 people in 140 countries.

A professional services organization that offers a complete range


of audit, tax, consulting and financial advisory services.

A global network of more than 21,000 dedicated professionals,


including 2,880 partners in 40 countries, combining assurance,
tax consulting, and financial advisory experience.

One of the largest global financial services consultancy, with $26


billion in global revenues in FY2009.

Serve 88% of financial services companies in the Fortune Global


500.

Deloitte member firms serve:

U.S. practice with 90 offices, 42,000 professionals, and fiscal


2009 revenues of approximately US$10.7 B.

Europe, Middle East, Africa


People: 56,000

Americas

Asia Pacific

People: 53,000

People: 26,000

All of the top 20 global banks

18 of the top 20 global insurance companies

17 of the top 20 global asset management firms

Contributes more than 25% of our organizations global revenues

Representative financial services clients:


AXA
Banco Santander
Bank of Tokyo
Mitsubishi, UFJ
BB&T
BNP Paribas
Goldman Sachs
E*Trade Financial

Fifth Third Bancorp


Huntington Bancshares
Lazard Frres
ING
Morgan Stanley
Northern Trust
RBC Bancorp
UBS

Source: Kennedy; Public Sector Consulting Marketplace 2009-2012; BNA Subsidiaries, LLC; used with permission

46

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

End-to-end
service
capabilities

Basel III requires a broad array of services and


competencies
Successful transition to Basel III may require robust business and capital strategies supported by strong execution and
technology implementation capabilities anchored in domain knowledge of credit and market risk, capital markets, asset
liability management, accounting, and regulatory reporting.
Deloitte is a professional services organization with an integrated strategy that has been key to our marketplace
successes in delivering large scale, complex programs such as Basel II.
Our competitive Basel II marketplace footprint provides a strong foundation for assisting clients to successfully
implement and comply with Basel III.

Risk
management

Treasury and
capital markets

Tax

Regulatory

Corporate
finance
advisory

Strategy &
operations

Accounting

Technology

Deloitte remains as the only


professional services organization
with service capabilities spanning
risk, treasury, accounting, tax,
corporate finance, and technology.

47

PMO

Implementation
and testing

We have a prestigious portfolio of referenceable core


Basel II bank clients, and one of the largest dedicated
Basel and bank capital team of any professional services
organization.

Our implementation approach incorporates banks business


strategy and an end-to-end view of requirements.

We have deep subject-matter knowledge in bank capital rules,


credit risk, treasury, traded and structured products, and
regulatory reporting.

Our accounting and infrastructure capabilities supports


regulatory reporting and disclosure at legal entity and
consolidated levels.

Data management, data governance, and data quality are


integral to our practice.

We utilize proprietary tool kits for gap assessment,


requirements traceability, project planning, and end-to-end
testing.

Our standardized PMO techniques and tools enable


stakeholder involvement, project execution, communication,
knowledge transfer, and education.

With several former regulators in our practice, we have strong


regulatory relationships and deep insights into regulatory
expectations.

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Marketplace
eminence and
thought leadership

Deloittes visibility, eminence, and thought leadership


on Basel III

Knowledge Congress Webinar Tougher Laws Woven into Basel, February 18, 2010

Michael Bleier, Partner, Reed Smith LLP;

Alok Sinha, Principal, Deloitte & Touche LLP;

Nancy Hunt, Acting Associate Director of the Capital Markets Branch, Policy Section, Division of Supervision and
Consumer Protection, Federal Deposit Insurance Corp (FDIC)

Michael Stevens, Conference of State Bank Supervisors

11th Annual Risk Conference New York (February 9, 2010); Keynote panel discussion Global Regulatory Reform

Greg Hands, MP; Shadow Treasury Minister, U.K;

Martha Cummings, Chief Risk Officer, Banco Santander;

Til Schuerman, Vice President, Federal Reserve Bank of New York

Alok Sinha, Principal, Deloitte & Touche LLP;

2nd European Risk Congress, London, June 9, 2010

48

Presentation, Basel III Guidance,: Overview and Implications, Alok Sinha, Principal, Deloitte & Touche LLP

Freddie Mac 2010 Executive Forum Future State of Mortgage Industry: Panel Discussion, September 1, 2010

Laurie Goodman, Senior M.D., Amherst Securities

Alok Sinha, Principal, Deloitte & Touche LLP ( Basel III Implications for Mortgage Industry)

Mark Willis, Furman Center for Real Estate & Urban Policy

CLSA Luncheon Speaker Series Topic, New York, (October 13, 2010), Capital at U.S. Banks How high is
enough?

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Marketplace
eminence and
thought leadership

Deloittes visibility, eminence, and thought leadership


on Basel III (cont.)

Banking & Securities Dbriefs


Tuesday, January 11, 2:00 PM EST

Basel III: Bank Regulatory Capital Landscape Continues to Evolve

Robert Maxant, Partner, Deloitte & Touche LLP

Alok Sinha, Principal, Deloitte & Touche LLP

Andrea di Giovanni, Director, Deloitte & Touche LLP

Knowledge Congress Live Webcast Basel 3: Important Updates, January 25, 2011

49

Nancy Hunt, Acting Associate Director of the Capital Markets Branch, Policy Section, Division of Supervision and
Consumer Protection, Federal Deposit Insurance Corp (FDIC)

Bobby Bean, Chief, Capital Markets Policy Section, Federal Deposit Insurance Corp (FDIC)

Michael Stevens, SVP & Director of Regulatory Affairs, Conference of State Bank Supervisors (CSBS)

Michael Bleier, Partner, Reed Smith LLP;

Alok Sinha, Principal, Deloitte & Touche LLP

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

In summary
Basel III rules have been recently finalized by the BCBS Supervision, and
implementation timeframe extends through 2019.
Bank capital landscape will evolve with the largest, global banks holding more capital,
stronger capital instruments, and capital buffers to protect from systemic risk.
Basel III introduces a global framework for liquidity for the first time and a leverage ratio
measure.

Banks will likely need to have much closer alignment between business strategy,
capital, and liquidity planning and funding decisions.
Enhancements will be necessary for infrastructure supporting corporate treasury,
risk management, capital markets, and external reporting functions.
U.S. rule-making process for Basel III should incorporate related Dodd-Frank
provisions.
Costs of implementation may be be significant, but likely not as high as Basel II
for well structured and executed programs.

50

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Copyright 2011 Deloitte Development LLC. All rights reserved.

Americas contacts
Alok Sinha
Principal, Deloitte & Touche LLP
Leader Banking & Securities Sector
San Francisco, CA
Phone: +1 415 783 5203
E-mail: asinha@deloitte.com

Partner, Deloitte & Touche LLP


Leader FSI Treasury Services
New York, NY
Phone: +1 212 436 7046
E-mail: rmaxant@deloitte.com

Andrea di Giovanni

Lakshmanan Balachander (Bala)

Director, Deloitte & Touche LLP

Director, Deloitte & Touche LLP

Governance, Regulatory & Risk Services

Governance, Regulatory & Risk Services

New York, NY

New York, NY

Phone: +1 212 436 7094

Phone: +1 212 436 5340

E-mail: andigiovanni@deloitte.com

E-mail: lbalachander@deloitte.com

Carrie Cheadle
Director, Deloitte & Touche LLP
Governance, Regulatory & Risk Services
Chicago, IL
Phone: +1 312 486 4095
E-mail: ccheadle@deloitte.com

51

Robert Maxant

Deloitte Perspectives Basel III: Transforming the Bank Capital Landscape

Edward T. Hida, CFA


Partner, Deloitte & Touche LLP
Global Leader Risk & Capital Management
New York, NY
Phone: +1 212 436 4854
E-mail: ehida@deloitte.com

Copyright 2011 Deloitte Development LLC. All rights reserved.

This presentation contains general information only and Deloitte is not, by means of this presentation, rendering accounting, business, financial,
investment, legal, tax, or other professional advice or services. This presentation is not a substitute for such professional advice or services, nor
should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect
your business, you should consult a qualified professional advisor.
Deloitte, its affiliates, and related entities shall not be responsible for any loss sustained by any person who relies on this presentation.
Copyright 2011 Deloitte Development LLC. All rights reserved.
Member of Deloitte Touche Tohmatsu Limited

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