Capital adequacy
The capital adequacy of NIBC is managed at the NIBC Holding level.
The principal ratios for reviewing the capital adequacy of NIBC are the Tier-1 ratio and the BIS ratio. These ratios, which were implemented by the Bank for International Settlements (BIS), are intended to promote comparability between financial institutions. They are based on the Basel Capital II Accord.
NIBC monitors developments in the ratios on a monthly basis, including comparison between the expected ratios and the actual ratios. These ratios indicate capital adequacy to mitigate on-balance credit risks, including off-balance sheet commitments, market risks, operational risks and other risk positions expressed as risk-weighted items in order to reflect their relative risk.
During the year ended 31 December 2008, NIBC complied amply with the capital requirements imposed by the Dutch Central Bank, which require a minimum Tier-1 ratio of 4% and a minimum BIS ratio of 8%.
The Tier-1 ratio is defined as Tier-1 capital divided by Risk Weighted Assets (RWA). The BIS ratio is defined as Total Capital (which is the sum of Tier-1 capital and Tier-2 capital) divided by RWA.
The Tier-1 ratio increased from 12.0% (2007, actual) to 16.6% (2008, actual) and the BIS ratio increased from 13.8% (2007, actual) to 18.9% (2008, actual).
The following table shows the summary of capital ratios and RWA for NIBC.
|
NIBC capital ratios |
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|
IN eur millions |
2008 |
2007 |
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|
Basel II |
Basel II |
Basel I |
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|
Actual |
Pro-forma |
Actual |
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|
capital ratios |
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|
Core Tier-I ratio |
13.5% |
10.2% |
9.7% |
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|
Tier-I ratio |
16.6% |
12.7% |
12.0% |
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|
BIS ratio |
18.9% |
15.0% |
13.8% |
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|
Risk weighted assets |
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|
Credit risk |
10,251 |
11,623 |
14,778 |
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|
Market risk |
145 |
620 |
620 |
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|
Operational risk |
704 |
1,065 |
- |
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|
Total RWA pre - floor |
11,100 |
13,308 |
15,398 |
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|
Add on: Basel I Floor |
364 |
892 |
NA |
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|
Total RWA |
11,464 |
14,200 |
15,398 |
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