This 90-minute accounting training focuses on the scarcity of capital for both banks and bank holding companies (BHCs). It shows statistically how banks with over $1 billion of assets have approximately only 12% of their assets supported by capital on a GAAP basis. Additionally, it shows how BHCs have only about 11%. Compared to other industries that is astonishing showing that owners have little to lose if there was a financial crisis or meltdown. Hence, the belief that government (taxpayer) funds need to be used to “save” the depository institutions in the desperate times.
It reviews the Basel III Capital requirements and their interplay with Prompt Collection Activities (PCA) standards and shows how the four key risk-based capital ratios are computed.
The Uniform Financial Institutions Rating System (UFIRS), known as CAMELS, is also reviewed, particularly the “capital” component.
The accounting webinar coverage allows participants to be able to deal with the existing capital requirements by reviewing the Call Report approach to calculating regulatory Capital ratios under Basel III, including details about the numerators (capital) and denominators (risk weighted assets) for the four key capital ratios:
- CET1 Capital Ratio
- Tier 1 Capital Ratio
- Total Capital Ratio
- Leverage Ratio
All institutions must be aware of this important area of bank accounting. All aspects of bank accounting, sooner or later must address capital risk and how it is measured. This accounting training helps accountants obtain knowledge about this important and sensitive capital situation by focusing on the four key capital ratios.
Paul J. Sanchez, CPA, CBA, CFSA conducts a CPA practice in Port Washington, New York. He is also the owner of Professional Service Associates (PSA), a consulting and professional training and development business servicing corporate clients (auditors, controllers, etc.), CPA firms, professional associations and others. He was an assistant professor at Long Island University – C.W. Post Campus as well as an adjunct lecturer at City University of New York. Prior to starting PSA, he was the Vice President-Professional Development for the Audit Division of a regional bank and Director of Professional Practices and Vice President of a money-center bank, where he directed the professional practice development and training for internal auditors.
1.5 CPE Credits & 1.8 AAP Credits