Capital adequacy

 

The capital adequacy of NIBC is managed at 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 II Capital 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 2009, NIBC complied with the capital requirements imposed by the DNB, 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 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 decreased from 16.6% at 31 December 2008 to 16.2% at 31 December 2009, and the BIS ratio decreased from 18.9% at 31 December 2008 to 18.4% at 31 December 2009.

 

Table 30 shows the summary of capital ratios and RWA for NIBC.

 

 

Table 30 NIBC capital ratios
in EUR millions		31 December 2009		31 December 2008
		Basel II		Basel II
		Actual		Actual
capital ratios
Core Tier-I ratio		13.6%		13.5%
Tier-I ratio		16.2%		16.6%
BIS ratio		18.4%		18.9%
Risk weighted assets
Credit risk		10,744		10,251
Market risk		98		145
Operational risk		957		704
Total RWA pre - floor		11,799		11,100
Add on: Basel I Floor		-		364
Total RWA		11,799		11,464