RBS 2012 Annual Report Download - page 454

452
Notes on the consolidated accounts continued
31 Capital resources continued
Qualifying Tier 2 capital 2012
£m
2011
£m
2010
£m
Undated subordinated debt 2,194 1,838 1,852
Dated subordinated debt, net of amortisation 13,420 14,527 16,745
Unrealised gains on AFS equity shares 63 108 25
Collectively assessed impairment provisions 399 635 778
Non-controlling Tier 2 capital — 11 11
16,076 17,119 19,411
Tier 2 deductions
50% of securitisation positions (1,107) (2,019) (2,321)
50% excess of expected losses over impairment provisions (2,522) (3,451) (2,658)
50% of material holdings (295) (340)(310)
50% of APS first loss — (2,763) (4,225)
(3,924) (8,573) (9,514)
Total Tier 2 capital 12,152 8,546 9,897
Supervisory deductions
Unconsolidated investments
- Direct Line Group (2,081)(4,354) (3,962)
- Other investments (162) (239) (318)
Other deductions (244) (235) (452)
(2,487) (4,828) (4,732)
Total regulatory capital 66,800 60,708 65,289
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 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%.
The Group has complied with the FSA’s capital requirements throughout the year.
A number of subsidiaries and sub-groups within the Group, principally banking and insurance entities, are subject to various individual regulatory capital
requirements in the UK and overseas.