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The Authority has completed a major overhaul of the banking policy framework to comply with the Basel II Accord, which introduces an enhanced supervisory framework and capital standard for banks. Basel II has been widely accepted around the world as the next evolution in global standards for banking supervision and implementing this new policy ensures that Bermuda’s regulation remains consistent with international best practice and expectations.Following extensive consultation with industry, the Authority published its “Revised Framework for Regulatory Capital Assessment” setting out in a single policy document the final rules for implementation in Bermuda of Pillars 1 and 2 of Basel II. Pillar 1 provides new rules for calculating the base capital requirement for institutions, while Pillar 2 sets out the process under which the Authority reviews how institutions assess the amount of capital they should hold, given the full range of risks they are exposed to, and the quality of controls they have established to mitigate those risks.
The Authority also published a consultation paper setting out the approach it proposed to adopt for the implementation of Pillar 3 of the Accord, which deals with disclosure and market discipline. After a period of consultation with industry participants, the final rules for the implementation of Pillar 3 were incorporated into the “Revised Framework for Regulatory Capital Assessment” Handbook on 31st December 2008.
The Authority has also published in final form the revised reporting framework for capital adequacy reporting of credit, market and operational risks together with related Guidance Notes.
Following the successful completion of this extensive policy revision project in 2008, the Authority met its key objective of implementing Basel II from 1st January 2009.
Copies of the “Revised Framework for Regulatory Capital Assessment” and related Guidance Notes can be found in the Document Centre under Policy & Guidance/Banking.
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