In Q3 2017, the Bank of England announced it will be developing and adopting a Wakalah fund-based deposit facility backed by Sukuk to allow UK Islamic banks to hold central bank assets as part of their liquid assets buffer. This recent development will help UK Islamic banks to comply with the Basel III LCR requirement to hold sufficient high-quality liquid assets. However, there is a continuing need for Islamic banks to access enhanced-yield Shariah compliant liquid instruments for liquidity management purposes. Additionally, Islamic banks continue to face a structural liquidity imbalance in their balance sheets due in part to the short-dated nature of Islamic capital market instruments, which makes regulatory NSFR (Net Stable Funding Ratio) compliance challenging.
This one-day course provides delegates with an understanding of issues and solutions to important liquidity and capital management issues faced by Islamic banks. The course approaches liquidity and capital management from an economic, and also a regulatory reporting, perspective. Basel III liquidity and capital regulatory compliance is examined, along with ILAAP (Internal Liquidity Adequacy Assessment Process) and ICAAP (Internal Capital Adequacy Assessment Process) preparation. Analytic solution methodologies for the internal management of liquidity and capital are then explored, including how value-at-risk is practically applied and implemented to manage liquidity and capital.
The course will include a high level of interactive discussion, analysis of examples / case studies, and thorough instruction in the treatment of liquidity and capital for Islamic banks. Knowledge gained from the course is directly applicable in practice.
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