Requirement (Basel II)
Assessment of capital adequacy
Requirements - Basel II
Description
Description
749. Supervisors should review the bank’s processes to determine that:
• Target levels of capital chosen are comprehensive and relevant to the current operating environment;
• These levels are properly monitored and reviewed by senior management; and
• The composition of capital is appropriate for the nature and scale of the bank’s business.
750. Supervisors should also consider the extent to which the bank has provided for unexpected events in setting its capital levels. This analysis should cover a wide range of external conditions and scenarios, and the ophistication of techniques and stress tests used should be commensurate with the bank’s activities.