19. Prudential Supervision Flashcards
Capital Adequacy
Ensuring a business hold sufficient reserves of capital
Solvency
Assets exceeds liabilities
Solvency ratio
Capital as a percentage of the risk adjusted value of assets.
Liquidity
The speed at which an asset can be turned into cash
Basel Accords
Minimum capital requirements for banks
Basel 11
Banks hold capital in according to their risk
Pillar 1= capital requirements for credit, market and operational risk
Pillar 2= regulators deal with individual components of risk
Pillar 3= Disclosure requirements for capital adequacy of organisations can be assessed
Basel 111
regulatory capital
asset and liability management
Capital requirements Directive
Implements Basel accords
Builds on rules + introduces new PrA
Total Loss absorbing capacity (TLAC)
Too big to fail
Solvency 11
reduce risk to insurance companies
reduce losses
promote confiidence
Solvency 11 Pillars
Pillar 1 - Capital requirements
Pillar2 - risk management
Pillar3 - Disclosure and transparency
GENPRU
The general prudential sourcebook for banks, building societies, insurers and investment firms.
- Details the way that the rules apply to different firms, rules and guidance on minimum capital requirements, and the definitions of different types of capital.
BIPRU
The prudential sourcebook for banks, building societies and investment firms, and details the rules applying to these firms.
IFPRU
The prudential sourcebook for investment firms and details the capital requirements for such firms.
INSPRU
The prudential sourcebook for insurers details the capital requirements and technical provisions for insurance companies.
