Durabrand Sts Region Free

Regulatory capital

• Hybrid capital instruments
• subordinated liabilities The level
• Preference shares
• Hybrid instruments
• Subordinated debt:
• II level III level

Terms:

• Free
• capital free capital base
• Total capital ratio or solvency ratio
• Active Risk-weighted / total capital for regulatory
• min 8% for banking groups in aggregate
• min 6% absolute
• Tier 1 capital ratio:
• Tier 1 / Risk-weighted Assets
• min 4% until 2006, 6% after 2006
• Core Tier 1 capital ratio
• Core Tier 1 / Risk-weighted Assets
• There is no regulatory limit

Regulatory capital:

1. Tier 1 or Tier: Similar to the net tangible assets

• Components: Capital stock
  
  + +
  Fund Reserves for general banking risks
  + Innovative capital instruments or preference shares (eg . Tremonti bond)
  - Treasury
  -
  Goodwill - Intangible
  Imm - Losses the previous year and current year
  - Share of preference shares in excess 15% of the total

• 
  Core Tier 1 Tier 1 - Preference shares

2. Primary or Tier 2 Tier

• Components:
  Reserves rivaluatazione
  + Hybrid capital instruments (including preference shares exceeding 15%)
  + Subordinated debt level II
  + + Provision for loan losses
  Net gains on investments
  - Net losses on securities
  - Net losses on investments
  - Other negative elements residual
  
• Credit losses
• ...
• Gains / losses: post presences in the income statement
• Calculation rules
1. In the hybrid preference shares are included more than 15% of Tier 1 subordinated liabilities
2. II level: max 50% of Tier 1
3. Gains - losses: 1.25% Max denominator of the solvency ratio (risk-weighted assets, APR)
4. Tier 2 is at most equal to Tier 1, regardless of its composition

3. Secondary Tier 3 or Tier

• Introduced in 2006
• Components:
  Subordinated debt level III (including the share of Tier 2, which exceeds the Tier 1) rules for calculating
1. III level in subordinated debt is included the portion of the components of Tier 2 which exceed the regulatory limit, ie, the Tier 1
2. the total can not exceed 250% of free assets Basic

Regulatory capital:

• Components:
  
  Tier 1 + Tier 2 + Tier 3
  
  - Investments in banks and financial institutions in excess of 10%
  - Investments in banks and finance less than 10% for the portion that exceeds T1 + T2 + T3

quotient and indexes:

• PV / APR: Total capital ratio
• Until 1996: Solvency ratio or capital ratio
• = APRC in April: On a risk-weighted credit
• Each mail was weighted assets for credit risk using the coefficients provided by Basel I
• After 1996: Total Capital Ratio ( April also includes other types of risk)
  
• April include market risk
• Methods VAR (Value at risk)
• This regulatory gap has produced the need for a strong recapitalization
• After Basel II
• April includes operational risk
• need for further recapitalization
• Risks recapitalization:
• Dilution control
• governance issues
• increase the cost of capital
  
• In other countries (USA) supervisors allow banks to include in regulatory capital debt securities, although structured stable. So even in Italy has decided to allow the use of debt as a means of capitalization for the purposes of supervision.
• CaR: = 8% in April
• Capital to Risk Capital at Risk
• Safety Net, the last bank to bail out the bank
• FC: = PV - CaR
• Free Capital
  
• Capital Assets free or free
  
• capital available for growth
• policy management development must be consistent with the availability of Free Capital
• Tier 1 Capital Ratio: Tier 1/APR => = 6
• % Core Tier 1 Capital Ratio = Core Tier 1/APR
• There is no regulatory limit
• Moral suasion by the Bank of Italy: CT1CR> = 6%
• free capital base: = Tier 1 to 6% in April
• Excess Tier 1 compliance with the regulatory requirements
• There is no English translation (as always Free Capital PV - CaR)