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Case Study

Enhancement of the Group’s ICAAP Framework

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SUMMARY

Avantage Reply undertook a project to assist an international banking group in enhancing its Internal Capital Adequacy Assessment Process (ICAAP) framework in alignment with best banking practices. Although the project was internally driven and not prompted by a regulatory review, it was undertaken to address specific needs identified within the organization. The existing ICAAP process was complex and time-consuming, lacking clarity on the Bank's overall capital adequacy.

Avantage Reply worked to redesign the ICAAP framework, focusing on simplification, clarity, and alignment. The aim was to create a more streamlined process that would provide a comprehensive view of capital adequacy, allowing for better decision-making and regulatory compliance. The final deliverables were tailored to address the identified shortcomings, including clear and concise policies and procedures, a comprehensive ICAAP handbook, and a detailed process map that aligned the ICAAP process across entities.

CUSTOMER GOALS

           
  • Enhance clarity on capital adequacy: The results and final documents from previous ICAAPs lacked a clear view of the Bank's overall capital adequacy. The client sought to address this by developing a more comprehensive and transparent framework that would provide a holistic understanding of the Bank's capital adequacy position.
  • Simplify and streamline the ICAAP process: The existing process was identified as complex and lengthy, causing inefficiencies. The client aimed to design a more straightforward and efficient process to enhance internal operations.
  • Align the process among entities: The client desired a standardized ICAAP process that would be consistent across all legal entities within the organization. This alignment would facilitate better coordination, collaboration, and comparability of results.

CHALLENGES

One of the major challenges faced was the organization’s and project's cross-border nature. The stakeholders involved were located in different locations and worked for different legal entities subject to diverse regulatory frameworks. This required addressing varying requirements while ensuring alignment with the Group’s ICAAP framework target operating model.

SOLUTION

To address these challenges, Avantage Reply designed a framework that aimed to enhance the process while minimizing business disruption and additional workload for the teams. Workshops were organized to facilitate a smooth handover to the stakeholders. The final deliverables included a prioritized list of enhancements for the Group's ICAAP Framework, updated policies and procedures, a detailed ICAAP handbook, and a comprehensive process map for the annual ICAAP.