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CAMELS Evaluation and Rating System plus Examination of CCAR and CLAR
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
With respect to CCAR and CLAR, Areas Covered are:
- Objectives of CCAR & CLAR
- CCAR &CLAR methodologies & evaluation components
- Bank Management considerations
- Evaluation results & consequences
Overview of the webinar
US bank regulators have continued to enhance their oversight of the major areas of risks to banks. The major risk evaluation and rating programs that have been introduced are: CAMELS, CCAR and CLAR. This presentation provides for a thorough review and understanding of these programs.
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.
Who should attend?
- 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
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
However, the specific management of each subject area rests with the staff that is charged with the responsibility of meeting and maintaining the standards set by the regulators for each component.
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.
Faculty - Mr.Robert Geary
Robert Geary is the founder of Greenwich Risk Management Advisory Services, LLC, and serves as the principal consultant on many of the firm’s consultancy mandates. He has been a banking and finance industry professional for 41 years and has spent 34 years with JP Morgan Chase & Co in various roles pertaining to senior treasury, financial market, asset management and risk management.
Earlier in his career, Mr. Geary managed Chase Manhattan Bank’s Euro and other offshore funding activities and was the bank’s first Asia/Pacific area treasury and financial markets executive located in Hong Kong. There for five years, he had overall functional management responsibility for the treasury, currency trading/sales activities and securities portfolios of Chase’s branches in nine countries in the region that included the major centers of Japan, Hong Kong and Singapore.
He has served on the board of directors of Chase Manhattan Overseas Banking Corporation as well as on numerous senior committees that included Chase’s Portfolio and Investment Strategy Committee, Tax Committee, International Asset/Liability Management Committee, Chase Investment Policy Committee, and Capital Markets & FX Risk Management Committee. Prior to joining Chase, he held positions at Chemical Bank, Chrysler Financial Corporation and National Bank of North America. Mr. Geary holds a BA degree in economics from Pace University and did graduate studies in finance at New York University Graduate School of Business. He is also currently a member of the Executive Advisory Board of St. John’s University Department of Accounting and Taxation.