In the advent of the global financial crisis of 2007-9, Islamic banking practitioners are under significant pressure to comply with capital adequacy standards. The hope of regulators is that compliance will reduce the chance of individual bank failure, and also contagion within the financial system. The IFSB’s capital adequacy framework for Islamic banks establishes minimum levels of capital which Islamic banks should maintain in order to remain solvent in the face of unexpected losses. As this framework has developed to keep track of evolving international standards for the regulation of banks set by the Bank for International Settlements (Basel Accords), they have become increasingly voluminous and technically challenging to understand. One of the biggest challenges for practitioners is knowing and understanding the relevant standards concerning capital requirements, and the determination of capital adequacy based on the capital charges of a multitude of risk types, and financial products. This not only impacts risk managers, but anyone whose financial and business decisions change the composition of the balance sheet on a forward-looking basis, for example Islamic asset origination teams and treasury managers.

This course has been developed for Islamic finance practitioners who need in-depth knowledge of the capital adequacy requirements of Islamic banks. The course provides a valued opportunity to know and to understand the IFSB’s capital adequacy standards in detail, and to develop meaningful insights into practical implementation and how to overcome implementation challenges. The course also covers the development and use of the Internal Capital Adequacy Assessment Plan (ICAAP), which is an essential capital management tool used to ensure that capital adequacy is properly managed taking into consideration future changes in an institution’s risk profile. The course provides an indispensable resource not only for Islamic bankers, but also Islamic bank supervisors and regulators needing expert knowledge of regulation.

The course will also include a high level of interactive discussion, practical case studies, and thorough instruction in capital adequacy regulations as they apply to Islamic banks, which can be used in practice to meet regulatory governance and reporting requirements.

KEY HIGHLIGHTS

• Know and understand Basel III as it relates to Islamic banks
• Know and understand IFSB standards for Islamic bank capital adequacy
• Understand how these standards are implemented in practice
• Understand how banks manage capital using economic capital planning
• Develop and use the Internal Capital Adequacy Assessment Plan
• Understand the treatment of complex financial instruments from a capital adequacy viewpoint