Targeted Review of Internal Models (TRIM)
Under Basel III, the International Banking regulatory framework, Banks are expected to hold a minimum amount of Capital. They can develop models internally to determine the capital amount required, however following several benchmark studies, it was found that there were inconsistencies and variability in how the capital amount was calculated across the different Banks. These inaccuracies prevent supervisors from accurately comparing banks to each other and ultimately reduces confidence in regulatory capital ratios.
All Significant Institutions with approved Pillar 1 IRB Models are in scope and the Joint Supervisory Teams (JST) are leading onsite engagements at 68 banks within 15 countries.
In response to these studies, The European Central Bank (ECB) is conducting a Targeted Review of Internal Models (TRIM). This review was launched in 2015 and is currently expected to be finalised in 2019. The main objectives of this review are to reduce variability of Risk Weighted Assets (RWA) stemming from internal models and to improve the homogeneity among the methodologies.
Banks are required to update their internal model approaches based on the review and emerging regulatory requirements by 2019.
We can help you to:
Understand the regulatory requirements of TRIM and how to fulfil them
Develop a plan to help you meet the terms of the requirements and ensure a successful result of the on-site inspection
Prepare the corresponding deliveries that are going to be requested by the supervisor
Support the implementation of the request of the JST during the on-site inspection.