Introduction
At CFG-Holdings Plc, we recognize the importance of robust risk management and capital adequacy as outlined in the Basel III framework. Our commitment to Basel III principles ensures that we maintain sufficient capital levels, manage risks effectively, and enhance the overall stability of our financial institution, thereby safeguarding the interests of our stakeholders.
- Capital Adequacy
1.1 Minimum Capital Requirements
• CFG-Holdings will maintain a minimum Common Equity Tier 1 (CET1) capital ratio of 4.5%, a Tier 1 capital ratio of 6%, and a total capital ratio of 8%, as stipulated by Basel III guidelines.
• We will ensure that our capital base is robust and capable of absorbing potential losses, promoting the long-term sustainability of the organization.
1.2 Capital Conservation Buffer
• In addition to the minimum capital requirements, CFG-Holdings will establish a Capital Conservation Buffer of 2.5% to enhance resilience during economic downturns.
• This buffer will help us retain sufficient capital to support ongoing operations and protect against unexpected losses.
- Risk Management
2.1 Comprehensive Risk Management Framework
• CFG-Holdings will implement a comprehensive risk management framework to identify, assess, and mitigate all relevant risks, including credit, market, operational, and liquidity risks.
• The board will oversee risk management practices, ensuring alignment with the company's risk appetite and strategic objectives.
2.2 Stress Testing and Scenario Analysis
• We will conduct regular stress tests and scenario analyses to evaluate the impact of adverse market conditions on our capital adequacy and overall financial stability.
• The results of these tests will inform our risk management strategies and help us develop contingency plans to address potential vulnerabilities.
- Liquidity Standards
3.1 Liquidity Coverage Ratio (LCR)
• CFG-Holdings will maintain a Liquidity Coverage Ratio (LCR) of at least 100% to ensure that we have sufficient liquid assets to cover net cash outflows during a 30-day stress period.
• We will continuously monitor our liquidity position and adjust our funding strategies to meet this requirement.
3.2 Net Stable Funding Ratio (NSFR)
• We will aim for a Net Stable Funding Ratio (NSFR) of at least 100% to ensure that our long-term funding is sufficient to support our business activities over a one-year horizon.
• This will involve analyzing our funding sources and their stability, ensuring we are prepared for potential liquidity challenges.
- Corporate Governance and Oversight
4.1 Board Oversight of Risk and Capital Management
• The Board of Directors will have ultimate responsibility for overseeing the implementation of Basel III standards, ensuring that the company maintains adequate capital and effectively manages risks.
• The board will regularly review risk management policies and practices to ensure they remain aligned with regulatory requirements and industry best practices.
4.2 Independent Risk Management Function
• CFG-Holdings will establish an independent risk management function, reporting directly to the board, to monitor and manage risks effectively.
• This function will ensure that risk management practices are integrated into the company’s strategic decision-making processes.
- Transparency and Disclosure
5.1 Public Disclosure of Capital Adequacy and Risk Management
• CFG-Holdings will provide transparent and timely disclosures regarding our capital adequacy, risk exposure, and management practices, in line with Basel III disclosure requirements.
• We will publish an annual Pillar 3 report that includes detailed information on our capital structure, risk management strategies, and compliance with regulatory requirements.
5.2 Engagement with Regulators
• We will maintain open and constructive communication with regulatory authorities to ensure compliance with Basel III standards and respond to any regulatory changes promptly.
• Regular engagement with regulators will help us stay informed about evolving requirements and expectations in the financial sector.
- Continuous Improvement
6.1 Ongoing Training and Development
• CFG-Holdings is committed to providing ongoing training and professional development for employees involved in risk management and compliance functions.
• This will ensure that our staff remains informed about Basel III requirements and best practices in risk management.
6.2 Periodic Review of Policies and Procedures
• We will conduct periodic reviews of our risk management policies and procedures to identify areas for improvement and ensure alignment with Basel III standards.
• Continuous improvement initiatives will be implemented to enhance our governance framework and operational resilience.
Conclusion
CFG-Holdings Plc is fully committed to adhering to the Basel III framework to strengthen our capital adequacy, risk management, and overall governance. By fostering a culture of transparency and accountability, we aim to enhance our resilience and maintain the trust of our stakeholders.
