CA-1.1 CA-1.1 Application
CA-1.1.1
All locally incorporated banks are required to measure and apply capital charges with respect to their credit, operational, market risk fiduciary and displacement risk, capital requirements.
Apr 08CA-1.1.2
Credit risk is defined as the potential that a bank's
counterparty will fail to meet its obligations in accordance with agreed terms. Credit risk exists throughout the activities of a bank in the banking book and in the trading book including both on-and off-balance-sheetexposures .Apr 08CA-1.1.3
Operational risk is defined as the risk of losses resulting from inadequate or failed internal processes, people and systems or from external events, which includes but is not limited to, legal risk and Sharia compliance risk. This definition excludes strategic and reputational risks.
Apr 08CA-1.1.4
Market risk is defined as the risk of losses in on- or off-balance-sheet positions arising from movements in market prices. The risks subject to the capital requirement of this module are:
(a) The risks pertaining to equities in the trading book;(b) Foreign exchange risk throughout the bank; and(c) Commodity risk throughout the bank.Amended: April 2011
April 2008CA-1.1.5
The CBB has adopted the IFSB definitions of fiduciary and displacement risk for the purpose of this volume.
Apr 08CA-1.1.6
Banks must compute capital charges for own funds as well as those of the unrestricted PSIAs. For the purpose of computing the Capital Adequacy Ratio, 30% of the bank's risk weighted assets relating to the unrestricted PSIAs must be included in accordance with the IFSB guidelines.
Apr 08
