234-9-46236401

234-9-462364S4
December 10, 2013

8SD]DIk]CIk]GLN]LA8]06]0S3

CIkCULAk 1C ALL 8ANkS AND DISCCUN1 nCUSLS CN 1nL IMLLMLN1A1ICN CI 8ASLL II]III
IN NIGLkIA

ursuanL Lo SecLlon 13 of Lhe 8anks and CLher llnanclal lnsLlLuLlons AcL, 1991 as amended, Lhe
CenLral 8ank of nlgerla, hereby lssues Lhese guldance noLes on kegu|atory Cap|ta|
Measurement and Management for the N|ger|an 8ank|ng System (for Lhe lmplemenLaLlon of
8asel ll/lll ln nlgerla).
1hey speclfy approaches for quanLlfylng Lhe rlsk welghLed asseLs for credlL rlsk, markeL rlsk and
operaLlonal rlsk for Lhe purpose of deLermlnlng regulaLory caplLal. 1he compuLaLlons are
conslsLenL wlLh Lhe requlremenLs of lllar l of 8asel ll Accord (lnLernaLlonal Convergence of
CaplLal MeasuremenL and CaplLal SLandards).
AlLhough Lhe guldellnes comply slgnlflcanLly wlLh Lhe requlremenLs of Lhe 8asel ll/lll accords,
cerLaln secLlons were ad[usLed Lo reflecL Lhe pecullarlLles of our envlronmenL. lrom Llme Lo
Llme, Lhe C8n wlll lssue caplLal lmplemenLaLlon noLes Lo clarlfy lLs expecLaLlons on compllance
wlLh Lhe Lechnlcal provlslons of Lhe regulaLlon.
Accordlngly, all banks and banklng groups are expecLed Lo adopL Lhe baslc approaches for Lhe
compuLaLlon of caplLal requlremenLs for credlL rlsk, markeL rlsk and operaLlonal rlsk as follows:
CredlL 8lsk - Lhe SLandardlzed Approach ls Lo be adopLed, however, all forms of
corporaLe clalms wlll be LreaLed as unraLed.
MarkeL 8lsk - Lhe SLandardlzed Approach ls Lo be adopLed.
CperaLlonal 8lsk - Lhe 8aslc lndlcaLor Approach (8lA) ls Lo be adopLed.

WlLhln Lhe flrsL Lwo years of Lhe adopLlon of Lhese approaches under lllar 1, lL ls hoped LhaL an
effecLlve raLlng sysLem would have developed ln nlgerla. 8anks and banklng groups are
pro[ecLed Lo have gaLhered more rellable daLa and galned more experlence LhaL would prepare
Lhem Lo conslder Lhe adopLlon of more sophlsLlcaLed approaches. 1he adopLlon of Lhe
SLandardlzed Approach for CperaLlonal 8lsk and oLher sophlsLlcaLed approaches wlll however
be sub[ecL Lo Lhe approval of Lhe C8n.
1he guldance noLes are appllcable Lo all banks and banklng groups llcensed Lo operaLe ln
nlgerla and should be applled on a solo as well as a consolldaLed basls. 1he mlnlmum caplLal
requlremenL ls reLalned aL 10 per cenL and 13 per cenL respecLlvely for local and lnLernaLlonally
acLlve banks.
1he Llmeframe for Lhe lmplemenLaLlon of 8asel ll wlll be as follows:
8anks are expecLed Lo commence a parallel run of boLh 8asel l and ll mlnlmum caplLal
adequacy compuLaLlon based on Lhe requlremenLs of Lhese guldellnes wlLh effecL from
!anuary, 2014
1he mlnlmum caplLal adequacy compuLaLlon under 8asel ll rules wlll commence ln !une
2014
ln llne wlLh 8asel ll lllar 2, banks are remlnded of Lhe lmporLance of comprehenslve rlsk
managemenL pollcles and processes LhaL effecLlvely ldenLlfy, measure, monlLor and conLrol
Lhelr rlsk exposures ln addlLlon Lo havlng approprlaLe board and senlor managemenL overslghL.
PenceforLh, banks are requlred Lo carry ouL Lhelr lnLernal CaplLal Adequacy AssessmenL rocess
(lCAA) on an annual basls, as aL uecember 31, and forward coples of Lhe reporL Lo Lhe C8n for
revlew noL laLer Lhan four (4) monLhs afLer Lhe year end. lor Lhe avoldance of doubL, Lhe
deadllne for submlsslon of Lhe lCAA for 2013 flnanclal year ls Aprll 30, 2014.
lurLhermore, banks are requlred Lo comply wlLh Lhe 8asel ll lllar 3 dlsclosure requlremenLs on
a bl- annual basls.

1he guldance noLes wlll remaln ln force durlng Lhe perlod of Lhe parallel run unLll full adopLlon
of 8asel ll ln !une, 2014 and release of addlLlonal noLes on oLher approaches for deLermlnlng
regulaLory caplLal and 8asel lll rules.


1CkUN8C MAk1INS (MkS.)
DIkLC1Ck CI 8ANkING SULkVISICN