RBS 2009 Annual Report Download - page 114

RBS Group Annual Report and Accounts 2009112
Capital resources
The following table analyses the Group’s regulatory capital resources on a fully consolidated basis at 31 December:
2009 2008 2007 2006 2005
£m £m £m £m £m
Capital base
Tier 1 capital 76,421 69,847 44,364 30,041 28,218
Tier 2 capital 15,389 32,223 33,693 27,491 22,437
Tier 3 capital —260 200 — —
91,810 102,330 78,257 57,532 50,655
Less: Supervisory deductions (4,565) (4,155) (10,283) (10,583) (7,282)
Total capital 87,245 98,175 67,974 46,949 43,373
Risk-weighted assets
Credit risk 513,200 551,300
Counterparty risk 56,500 61,100
Market risk 65,000 46,500
Operational risk 33,900 36,900
668,600 695,800
APS relief (127,600) —
541,000 695,800
Banking book:
On-balance sheet 480,200 318,600 303,300
Off-balance sheet 84,600 59,400 51,500
Trading book 44,200 22,300 16,200
609,000 400,300 371,000
Risk asset ratios %%%%%
Core Tier 1 11.0 6.6 4.5
Tier 1 14.1 10.0 7.3 7.5 7.6
Total 16.1 14.1 11.2 11.7 11.7
Note:
(1) The data for 2009 and 2008 are on a Basel II basis; prior periods are on a Basel I basis.
It is the Group’s policy to maintain a strong capital base, to expand it as
appropriate and to utilise it efficiently throughout its activities to optimise
the return to shareholders while maintaining a prudent relationship
between the capital base and the underlying risks of the business. In
carrying out this policy, the Group has regard to the supervisory
requirements of the Financial Services Authority (FSA). The FSA uses
Risk Asset Ratio (RAR) as a measure of capital adequacy in the
UK banking sector, comparing a bank’s capital resources with its risk-
weighted assets (the assets and off-balance sheet exposures are
‘weighted’ to reflect the inherent credit and other risks); by international
agreement, the RAR should be not less than 8% with a Tier 1 component
of not less than 4%. At 31 December 2009, the Group’s total RAR was
16.1% (2008 – 14.1%) and the Tier 1 RAR was 14.1% (2008 – 10.0%).
Business review continued