Risk management in practice: analyzing capital adequacy and compliance under the Basel Accord at Bank Asia PLC

Abstract

This report is about my three months as a risk management intern at Bank Asia PLC. On November 27, 1999, the company officially opened for business. It was led by President and Managing Director Mr. Sohail R K Hussain and a team of experienced professionals. It is now one of the largest private commercial banks in Bangladesh. The report's goal is to look at the bank's capital adequacy and how well it follows the Basel Accord's Supervisory Review Process (SRP). It will also find areas that need improvement and make suggestions based on what has been learned in school. Data from both primary and secondary sources were used to write this report. My observations and personal experiences during my internship at the bank, as well as in-depth conversations I had with people in the Risk Management Division, including my supervisor, Riyashad Ahmed, and co-supervisor, Saif Hossain, are the sources of my primary data. The rest of the information comes from secondary sources like the bank's official disclosures, annual reports, regulatory guidelines from Bangladesh Bank, and articles in academic journals. The report's results show that the bank has enough capital, but the Total Capital Ratio (CRAR) has gone down a little bit and the Leverage Ratio is unstable. This is made worse by the fact that the Internal Capital Adequacy Assessment Process (ICAAP) and stress testing disclosures are not very clear. The results led to the following recommendations: keep an eye on capital trends, look into changes in the Leverage Ratio, improve ICAAP and stress testing, make things more clear, make the best use of capital, and make data systems stronger.