Understanding Bank Solvency and Basel Accords
Bank Solvency Fundamentals
Solvency is a bank’s ability to cover the risk of its assets with sufficient capital. The solvency ratio is calculated as Capital / RWA ≥ 8%. If the ratio falls below this threshold, the bank does not comply with regulatory requirements.
Capital Categories
- CET1: Highest-quality capital, including ordinary shares, reserves, and retained earnings.
- AT1: Loss-absorbing instruments, primarily CoCos.
- Tier 1: CET1 + AT1.
- Tier 2: Lower-quality capital, such as subordinated debt,
Financial Risk Management: Regulatory Frameworks & Key Risks
Financial Regulatory Framework & Capital
Legal Power Structure
- Legislative Branch: Passes laws in parliament.
- Executive Branch: Administers and enforces laws.
- Judiciary: Interprets laws.
Regulatory Instruments
- Acts: Statutory laws passed by parliament.
- Subsidiary Legislation: Specifies in greater detail the requirements that Financial Institutions (FIs) adhere to.
- Notice: Legally binding requirements.
- Codes: Non-statutory, no force of law, but a system of governing rules with non-statutory sanctions.
SQL Database Creation and Querying: Hands-On Exercises
Starting a New Database
- Creating the ‘escola’ database
CREATE DATABASE escola;
- Opening the database for use
USE escola;
Creating Tables
Creating the ‘aluno’ (student) table
CREATE TABLE aluno (RA INT(4), nome CHAR(30), nascimento DATE, sex CHAR(1), cidade CHAR(30), year INT(1), codcurso INT(3));
Creating the ‘course’ table
CREATE TABLE course (code INT(3), nome CHAR(30), Duracao INT(1));
Inserting Data into Tables
Inserting data into the ‘aluno’ table
Insert yourself and four friends into the ‘aluno’ table:
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