RBS 2012 Annual Report Download - page 103

RBS GROUP 2012
101
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.
2012 2011 2010 2009 2008
£m £m £m £m £m
Capital base
Tier 1 capital 57,135 56,990 60,124 76,421 69,847
Tier 2 capital 12,152 8,546 9,897 15,389 32,223
Tier 3 capital — — — — 260
69,287 65,536 70,021 91,810 102,330
Less: Supervisory deductions (2,487) (4,828) (4,732) (4,565) (4,155)
Total regulatory capital 66,800 60,708 65,289 87,245 98,175
Risk-weighted assets
Credit risk 323,200 344,300 385,900 513,200 551,300
Counterparty risk 48,000 61,900 68,100 56,500 61,100
Market risk 42,600 64,000 80,000 65,000 46,500
Operational risk 45,800 37,900 37,100 33,900 36,900
459,600 508,100 571,100 668,600 695,800
Asset Protection Scheme relief — (69,100) (105,600) (127,600) n/a
459,600 439,000 465,500 541,000 695,800
Risk asset ratios % % % % %
Core Tier 1 10.3 10.6 10.7 11.0 6.6
Tier 1 12.4 13.0 12.9 14.1 10.0
Total 14.5 13.8 14.0 16.1 14.1
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 2012, the Group's total RAR was 14.5% (2011 - 13.8%) and the Tier 1 RAR was 12.4% (2011 -
13.0%). For further information refer to Balance sheet management: Capital management on pages 127 to 136.