april 2001 n.
Download
Skip this Video
Loading SlideShow in 5 Seconds..
April 2001 PowerPoint Presentation
Download Presentation
April 2001

Loading in 2 Seconds...

play fullscreen
1 / 23

April 2001 - PowerPoint PPT Presentation


  • 140 Views
  • Uploaded on

April 2001. An Introduction to Capital Adequacy. Disclaimer.

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'April 2001' - gudrun


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
april 2001

April 2001

An Introduction to Capital Adequacy

disclaimer
Disclaimer

The material that follows is a presentation of general background information about the Bank’s activities current at the date of the presentation, 3 April 2001. It is information given in summary form and does not purport to be complete. It is not intended to be relied upon as advice to investors or potential investors and does not take into account the investment objectives, financial situation or needs of any particular investor. These should be considered, with or without professional advice when deciding if an investment is appropriate.

speaker s notes
Speaker’s Notes
  • Speaker’s notes for this presentation are attached below each slide.
  • To access them, you may need to save the slides in PowerPoint and view/print in “notes view.”
agenda
Agenda
  • Theory
    • Principles
    • Treatment of investment in life & funds management businesses
  • Practice
    • Effect of an increase in Appraisal Value on Capital Adequacy
    • Effect of accelerated goodwill write-off on Capital Adequacy
principles
Principles
  • Capital Adequacy is calculated on stand alone and consolidated basis
  • Consolidated basis excludes life companies
  • Assets are risk weighted
  • Two tiers of capital
  • Regulator requires minimum ratios, market requires higher ratios
treatment of life insurance and funds management businesses
Treatment of Life Insurance and Funds Management Businesses
  • Assets and liabilities not consolidated
  • NTA for capital adequacy purposes includes acquired VBIF
  • NTA is deducted from total capital
  • Balance is deducted from Tier 1
slide7

CapitalAdequacy

30 Jun 00 31 Dec 00

Total Tier One Capital 9,618 8,914

Total Tier Two Capital 6,097 5,802

Tier One and Tier Two Capital 15,715 14,716

Deductions (3,197) (2,278)

Total Regulatory Capital12,518 12,438

Risk Weighted Capital Ratios (%)

Tier one 7.49 6.71

Tier two 4.75 4.37

Less Deductions (2.49)(1.71)

Total 9.75 9.37

slide8

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

slide9

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

slide10

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

slide11

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

slide12

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

slide13

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier One Capital

Total Shareholders’ Equity 18,435 19,461

Eligible Loan Capital 418 423

Total Shareholders’ Equity and Loan Capital 18,853 19,884

Less Goodwill (5,905) (6,007)

Less Preference shares (86) (39)

Less Intangible component

of investment in

non-consolidated subsidiaries (2,656) (3,449)

Less Outside equity interests

in entities controlled

by non-consolidated subsidiaries (588)(1,475)

Total Tier One Capital 9,618 8,914

treatment of investments in life and funds management businesses

Appraisal Value

Value

Future New

Business

Value

Future New

Business

Value

Future New

Business

Intangible Component of Investment in

Non-Consolidated Subs

Deducted from

Tier 1 Capital

Embedded

Value

Value

Business

in Force

Self Generated

Business

in Force

Acquired

Business

in Force

Shareholder

NTA

Shareholder

NTA

Deducted from Total Capital

Treatment of Investments in Life and Funds Management Businesses

Capital Adequacy

Components

Less

External Debt

slide15

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier Two Capital

General Provisions for bad and doubtful debts 1,358 1,412

FITB related to general provision (420) (420)

Dated note and bond issues 5,120 4,771

Preference shares 39 39

Total Tier Two Capital 6,0975,802

slide16

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier Two Capital

General Provisions for bad and doubtful debts 1,358 1,412

FITB related to general provision (420) (420)

Dated note and bond issues 5,120 4,771

Preference shares 39 39

Total Tier Two Capital 6,0975,802

slide17

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier Two Capital

General Provisions for bad and doubtful debts 1,358 1,412

FITB related to general provision (420) (420)

Dated note and bond issues 5,120 4,771

Preference shares 39 39

Total Tier Two Capital 6,0975,802

slide18

CapitalAdequacyComponents

30 Jun 00 31 Dec 00

Tier Two Capital

General Provisions for bad and doubtful debts 1,358 1,412

FITB related to general provision (420) (420)

Dated note and bond issues 5,120 4,771

Preference shares 39 39

Total Tier Two Capital 6,0975,802

slide19

CapitalAdequacy

30 Jun 00 31 Dec 00

Total Tier One Capital 9,618 8,914

Total Tier Two Capital 6,097 5,802

Tier One and Tier Two Capital 15,715 14,716

Deductions (3,197) (2,278)

Total Regulatory Capital12,518 12,438

Deductions for life insurance and funds management companies:

Tier one 2,656 3,449

Total capital 3,1972,278

Total5,853 5,727

capital adequacy effect of increase in appraisal value

Increase

Increase

Intangible Component of Investment in

Non-Con Subs

Deducted from

Tier 1 Capital

Deduction increases

Shareholder

Equity

Value

Future New

Business

Self Generated

Business

in Force

Increases

Acquired

Business

in Force

Less

External Debt

Shareholder

NTA

Deducted from Total Capital

No Change

Capital Adequacy Effect of Increase in Appraisal Value

Capital Adequacy

Components

Appraisal Value

Increase

Value

Future New

Business

Value

Business

in Force

Shareholder

NTA

capital adequacy effect of accelerated goodwill write off

Shareholders’ Equity

$300

Less: Goodwill

$300

Other Additions/Adjustments

Tier 1 Capital

Capital AdequacyEffect of Accelerated Goodwill Write-off

Shareholders’ Equity

Less: Goodwill

Other Additions/Adjustments

Tier 1 Capital

summary
Summary
  • Capital adequacy calculated as per usual, except no consolidation of life insurance and funds management companies
  • Value of life insurance and funds management companies deducted from capital base
    • NTA from total capital
    • Balance from Tier 1
april 20011

April 2001

An Introduction to Capital Adequacy