Whether it is SR 09-4 or Standardized Basel II compliance, Second Pillar Consulting is committed to assisting community, regional, and super-regional banks not currently served by larger consulting companies. We avoid the high prices, intellectual clutter, and long sales cycles of the integrated service providers by delivering a targeted product with immediate benefits.

SR 09-4 plainly states that capital adequacy goes well beyond just having regulatory capital ratios that exceed "minimum" or "well-capitalized" statutory levels.  This guidance directs examiners to scrutinize the complete institutional risk profile in their determination of capital adequacy. Our SR 09-4 Primer provides a complete overview of the regulation and our SR 99-18 Primer describes supporting guidance on internal capital adequacy processes. The most demanding aspect of SR 09-4 is an emphasis on an integrated capital planning process that considers:

	Overall asset quality, potential need to increase reserves and write down assets, and concentrations of credit;
	Potential for unanticipated losses and declines in asset values;
	Implicit and explicit liquidity and credit commitments, including off-balance sheet and contingent liabilities;
	Quality and level of current and prospective earnings, including earnings capacity under a number of plausible economic scenarios;
	Ability to serve as an ongoing source of financial and managerial strength to depository institution subsidiaries insured by the Federal Deposit Insurance Corporation, including the extent of double leverage and the condition of subsidiary depository institutions;
	Other risks that affect the BHC's financial condition and are not fully captured in regulatory capital calculations;
	Composition and quality of capital; and
	Ability to raise additional equity capital in prevailing market and economic conditions.

The three components of our product support Standardized Basel II compliance:

1. Detailed Capital Savings Estimate.  The free initial capital savings estimate that we provide upon request exploits public call report data (click here).  Capital savings estimates can be improved with client-supplied data prior to committing to a compliance effort. These assessments require at least one site visit and access to company data and accounting personnel.
   
   
2. Gap Analysis.  Banks and their examiners will need a complete analysis of the compliance gaps that must be bridged prior to approval. Using productized checklists and materials, we help our clients rapidly assess and develop plans to close any compliance gaps.
   
   
3. The Internal Capital Adequacy Assessment Process or ICAAP. The ICAAP requires a detailed articulation and quantification of the institutional risk profile and risk appetite.  The ICAAP must document:
   
   

   	Identification of and appetite for key risks
   	Economic Capital modeling
   	Scenario analysis and stress testing
   	Capital contingency plans
   	Comprehensive policies and procedures

   A comprehensive ICAAP can range from a few pages to more than fifty, based upon the complexity of the institution and expectations of examiners. Banks also have clear responsibilities in implementing the ICAAP, demonstrating that effective governance, clear accountability and oversight, and solid risk management are embedded in bank behavior.

A Second Pillar Consulting Basel II project encompasses at least eight distinct performance steps:

1. Data collection
2. Data analysis
3. Draft ICAAP
4. Senior Management review
5. Business remediation
6. Final ICAAP
7. Board and Senior Management training
8. Supervisory review and approval

Complete Standardized compliance will take at least six months, depending upon the bank's readiness and supervisory review schedule. Contact us for additional information on our Basel II compliance services.