Goldman Sachs 2015 Annual Report Download - page 194

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
Accumulated Other Comprehensive Loss
The tables below present accumulated other comprehensive
loss, net of tax by type.
December 2015
$ in millions
Balance,
beginning
of year
Other
comprehensive
income/(loss)
adjustments,
net of tax
Balance,
end of
year
Currency translation $(473) $(114) $(587)
Pension and postretirement
liabilities (270) 139 (131)
Accumulated other
comprehensive income/(loss),
net of tax $(743) $ 25 $(718)
December 2014
$ in millions
Balance,
beginning
of year
Other
comprehensive
income/(loss)
adjustments,
net of tax
Balance,
end of
year
Currency translation $(364) $(109) $(473)
Pension and postretirement
liabilities (168) (102) (270)
Cash flow hedges 8 (8) —
Accumulated other
comprehensive loss,
net of tax $(524) $(219) $(743)
Note 20.
Regulation and Capital Adequacy
The Federal Reserve Board is the primary regulator of
Group Inc., a bank holding company under the Bank
Holding Company Act of 1956 (BHC Act) and a financial
holding company under amendments to the BHC Act. As a
bank holding company, the firm is subject to consolidated
regulatory capital requirements which are calculated in
accordance with the revised risk-based capital and leverage
regulations of the Federal Reserve Board, subject to certain
transitional provisions (Revised Capital Framework).
The risk-based capital requirements are expressed as capital
ratios that compare measures of regulatory capital to risk-
weighted assets (RWAs). Failure to comply with these
requirements could result in restrictions being imposed by
the firm’s regulators. The firm’s capital levels are also
subject to qualitative judgments by the regulators about
components of capital, risk weightings and other factors.
Furthermore, certain of the firm’s subsidiaries are subject to
separate regulations and capital requirements as described
below.
Capital Framework
The regulations under the Revised Capital Framework are
largely based on the Basel Committee’s final capital
framework for strengthening international capital
standards (Basel III) and also implement certain provisions
of the Dodd-Frank Act. Under the Revised Capital
Framework, the firm is an “Advanced approach” banking
organization.
As of December 2015, the firm calculated its Common
Equity Tier 1 (CET1), Tier 1 capital and Total capital ratios
in accordance with (i) the Standardized approach and
market risk rules set out in the Revised Capital Framework
(together, the Standardized Capital Rules) and (ii) the
Advanced approach and market risk rules set out in the
Revised Capital Framework (together, the Basel III
Advanced Rules). The lower of each ratio calculated in
(i) and (ii) is the ratio against which the firm’s compliance
with its minimum ratio requirements is assessed. Each of
the ratios calculated in accordance with the Basel III
Advanced Rules was lower than that calculated in
accordance with the Standardized Capital Rules and
therefore the Basel III Advanced ratios were the ratios that
applied to the firm as of December 2015. The capital ratios
that apply to the firm can change in future reporting periods
as a result of these regulatory requirements.
As of December 2014, the firm calculated its CET1, Tier 1
capital and Total capital ratios using the Revised Capital
Framework for regulatory capital, but RWAs were
calculated in accordance with (i) the Basel I Capital Accord
of the Basel Committee, incorporating the market risk
requirements set out in the Revised Capital Framework,
and adjusted for certain items related to capital deductions
and for the phase-in of capital deductions (Hybrid Capital
Rules), and (ii) the Basel III Advanced Rules. The lower of
each ratio calculated in (i) and (ii) was the ratio against
which the firm’s compliance with its minimum ratio
requirements was assessed. Each of the ratios calculated in
accordance with the Basel III Advanced Rules was lower
than that calculated in accordance with the Hybrid Capital
Rules and therefore the Basel III Advanced ratios were the
ratios that applied to the firm as of December 2014.
182 Goldman Sachs 2015 Form 10-K