RBS 2011 Annual Report Download - page 97

RBS Group 2011 95
Capital resources
The following table analyses the Group's regulatory capital resources on a fully consolidated basis at 31 December as monitored by the FSA for
regulatory purposes.
2011 2010 2009 2008 2007
£m £m £m £m £m
Capital base
Tier 1 capital 56,990 60,124 76,421 69,847 44,364
Tier 2 capital 8,546 9,897 15,389 32,223 33,693
Tier 3 capital — — — 260 200
65,536 70,021 91,810 102,330 78,257
Less: Supervisory deductions (4,828) (4,732) (4,565) (4,155) (10,283)
Total regulatory capital 60,708 65,289 87,245 98,175 67,974
Risk-weighted assets (1)
Credit risk 344,300 385,900 513,200 551,300
Counterparty risk 61,900 68,100 56,500 61,100
Market risk 64,000 80,000 65,000 46,500
Operational risk 37,900 37,100 33,900 36,900
508,100 571,100 668,600 695,800
Asset Protection Scheme relief (69,100) (105,600) (127,600) n/a
439,000 465,500 541,000 695,800
Banking book:
On-balance sheet 480,200
Off-balance sheet 84,600
Trading book 44,200
609,000
Risk asset ratios %% % % %
Core Tier 1 10.6 10.7 11.0 6.6 4.5
Tier 1 13.0 12.9 14.1 10.0 7.3
Total 13.8 14.0 16.1 14.1 11.2
Note:
(1) The data for 2008 onwards are on a Basel II basis; 2007 is 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
1component of not less than 4%. At 31 December 2011, the Group's total RAR was 13.8% (2010 - 14.0%) and the Tier 1 RAR was 13.0% (2010 -
12.9%). For further information refer to Balance sheet management: Capital management on pages 110 to 115.