Capital adequacy and Off balance sheet: Difference between pages

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1. ''Bank regulation - capital requirements - Bank for International Settlements (BIS).''
(OBS).


Capital adequacy is the system of regulating banks (and other financial institutions) by requiring them to maintain minimum acceptable levels - and types - of capital, adequate to absorb their potential credit losses and other trading losses.
1.


In financing where assets and liabilities are acquired indirectly by an entity by way of a financial structure but are not purchased directly by the entity, in such a way that the liabilities are not required to be disclosed in the entity's balance sheet.


Requirements are laid down internationally by the Bank for International Settlements (BIS) and implented and monitored by domestic central banks.  
The trend in financial reporting over time has been to restrict the types of structures which may be accounted for 'off balance sheet' in this way (instead requiring the liabilities to be appropriately reported in the balance sheet of the reporting entity).


Historically, the BIS capital adequacy standard had been 8%.


Under the Basel III framework this standard was increased (strengthened) substantially - very roughly doubled - and its measurement refined.  
2.


The indirect financial reporting of the related liabilities within the notes to the financial statements - or possibly not at all - rather than directly on the face of the balance sheet.


2. ''Insurance & other contexts.''
Sometimes known as 'off balance sheet treatment'.


Similar risk management and regulation in other contexts.


For example, insurance companies.
Relevant accounting standards include Sections 2, 11, 12 and 23 of FRS 102.




== See also ==
== See also ==
* [[Bank for International Settlements]] (BIS)
* [[Balance sheet]]
* [[Basel II]]
* [[FRS  102]]
* [[Basel 2.5]]
* [[Off-balance sheet finance]]
* [[Basel III]]
* [[Capital Adequacy Directive]]
* [[Capital Requirements Directive]]
* [[Central bank]]
* [[Common equity]]
* [[Countercyclical buffer]]
* [[Economic capital]]
* [[G-SIB]]
* [[Insurance]]
* [[IRB]]
* [[IRRBB]]
* [[GCLAC]]
* [[ICAAP]]
* [[Microprudential]]
* [[Own funds]]
* [[Pillar 1]]
* [[Pillar 2]]
* [[Pillar 3]]
* [[Primary Loss Absorbing Capital]]
* [[Regulatory capital]]
* [[Reserve requirements]]
* [[RWAs]]
* [[Settlement risk]]
* [[Slotting]]
* [[Solvency II]]


[[Category:Compliance_and_audit]]
[[Category:Accounting,_tax_and_regulation]]

Revision as of 11:15, 6 November 2015

(OBS).

1.

In financing where assets and liabilities are acquired indirectly by an entity by way of a financial structure but are not purchased directly by the entity, in such a way that the liabilities are not required to be disclosed in the entity's balance sheet.

The trend in financial reporting over time has been to restrict the types of structures which may be accounted for 'off balance sheet' in this way (instead requiring the liabilities to be appropriately reported in the balance sheet of the reporting entity).


2.

The indirect financial reporting of the related liabilities within the notes to the financial statements - or possibly not at all - rather than directly on the face of the balance sheet.

Sometimes known as 'off balance sheet treatment'.


Relevant accounting standards include Sections 2, 11, 12 and 23 of FRS 102.


See also