Regulatory Alerts2017-02-27
Guidance on the approach to Pillar 2 following the implementation of Basel III-consistent minimum regulatory capital requirements in Guernsey
The Guernsey Financial Services Commission issued this guidance to define the Pillar 2 add-on requirements for banks implementing Basel III-consistent capital standards. It mandates that total regulatory capital must exceed 11% of Risk Weighted Assets, comprising an 8% Pillar 1 charge, a 2.5% Capital Conservation Buffer, and a Pillar 2 add-on with a 0.5% floor determined through the Supervisory Review and Evaluation Process. The document emphasizes that banks must identify key material risks through their Internal Capital Adequacy Assessment Process, with the Board of Directors retaining ultimate responsibility for risk identification and capital adequacy.
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