CAMELS is one of the most significant evaluation methodologies for banks employed by US regulators, namely the Federal Reserve Bank, Comptroller of the Currency and Federal Deposit Insurance Corporation. CAMELS is the titling of the rating system employed by these regulators with the titling standing for each of the components contained in the evaluation methodology. Specifically, a bank’s condition is evaluated and rated with respect to: Capital Adequacy, Asset Quality, Management Quality, Earnings, Liquidity and Sensitivity to Market Risk. The evaluation conducted by this program is intense and quite detailed and, based on a bank’s CAMELS evaluation, a bank is given a rating for each individual CAMELS component as well as an overall composite rating. It is imperative that a bank understands the CAMELS evaluation process, how the evaluation of each component is formulated, how ratings are established and the impact of a rating on a bank’s present and planned business initiatives. The understanding of CAMELS must exist with executive management, senior business management as well as with all staff responsible for the management of the elements of each CAMELS component.
CCAR and CLAR are two other significant evaluation methodologies for banks employed by US regulators to address a bank’s current and forecasted capital and liquidity conditions. They are intended to ensure that a bank has a long-term planning program for both its capital and liquidity requirements. The evaluation incorporates stress testing into its programs for each. Ratings are given for each are given on pass or fail basis and here also executive management, senior business management as well as with all staff responsible for the management of a bank’s capital and liquidity understand the CCAR and CLAR evaluation process and its rating system.
WHY SHOULD YOU ATTEND?
The US bank business environment has experienced a variety of issues and problems over the years and US regulators are diligent in ensuring that a bank meets a required standard in key operating areas of a bank which, if not met or are considered substandard, may impact the ongoing viability of a bank. The US regulators continue to engage in improving their assessment methodologies and monitoring processes of banks, thereby increasing the level of bank management attention to the subject areas being evaluated.Management responsibility to the subject areas of the CAMELS, CCAR and CLAR evaluation exists with a bank’s:
- Board of Directors
- Executive management
- Senior business management
This presentation dissects each of the CAMELS,CCAR and CLAR components in terms of the regulators’ evaluation methodology for each long-term used to assess structural considerations and the quality of management afforded each component. It continues to address the rating process of each component and the considerations underpinning each rating. Lastly, it addresses the composite rating process of CAMELS and the considerations responsible underpinning each rating.
LEARNING OBJECTIVES
With respect to CAMELS, Areas Covered are:- Identify the CAMELS components
- Assessment of Capital quality
- Assessment of Asset quality
- Assessment of Management quality
- Assessment of Earnings quality
- Assessment of Liquidity quality
- Assessment of Sensitivity to Market Risk quality
1.Particular focus on interest rate risk - Component rating methodology
1.Rating denotations
2.Rating formulation
3.Proposed/required actions - Composite rating methodology
1.Rating denotations
2.Rating formulation
3.Rating implications
- Objectives of CCAR & CLAR
- CCAR &CLAR methodologies & evaluation components
- Bank Management considerations
- Evaluation results & consequences
WHO WILL BENEFIT?
- EVP/SVP – Commercial Banks
- CFOs – Commercial Banks
- Controllers– Commercial Banks
- Treasury Managers – Commercial Banks
- Risk Managers – Commercial Banks
- Compliance Managers – Commercial Banks
- Auditors – Commercial Banks
Management responsibility to the subject areas of the CAMELS, CCAR and CLAR evaluation exists with a bank’s:
- Board of Directors
- Executive management
- Senior business management
This presentation dissects each of the CAMELS,CCAR and CLAR components in terms of the regulators’ evaluation methodology for each long-term used to assess structural considerations and the quality of management afforded each component. It continues to address the rating process of each component and the considerations underpinning each rating. Lastly, it addresses the composite rating process of CAMELS and the considerations responsible underpinning each rating.
- Identify the CAMELS components
- Assessment of Capital quality
- Assessment of Asset quality
- Assessment of Management quality
- Assessment of Earnings quality
- Assessment of Liquidity quality
- Assessment of Sensitivity to Market Risk quality
1.Particular focus on interest rate risk - Component rating methodology
1.Rating denotations
2.Rating formulation
3.Proposed/required actions - Composite rating methodology
1.Rating denotations
2.Rating formulation
3.Rating implications
- Objectives of CCAR & CLAR
- CCAR &CLAR methodologies & evaluation components
- Bank Management considerations
- Evaluation results & consequences
- EVP/SVP – Commercial Banks
- CFOs – Commercial Banks
- Controllers– Commercial Banks
- Treasury Managers – Commercial Banks
- Risk Managers – Commercial Banks
- Compliance Managers – Commercial Banks
- Auditors – Commercial Banks
Speaker Profile
Robert Geary is the founder of Greenwich Risk Management Advisory Services "LLC" and services as the principal consultant on many of the firm's consultancy mandates.Robert has been a banking and finance industry professional for 43 years with 34 years serving in a variety of senior Treasury, financial market, asset management and risk management roles at JP Morgan Chase & Co. For the last 6 years of his career with JP Morgan Chase, Robert had undertaken risk management oversight roles that have included Head of Market, Credit and Operational Risk Management for Chase Asset Management and being Managing Director of …
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