Goldman Sachs 2015 Annual Report Download - page 197

THE GOLDMAN SACHS GROUP, INC. AND SUBSIDIARIES
Notes to Consolidated Financial Statements
The table below presents the ratios calculated in accordance
with both the Standardized and Basel III Advanced rules as
of both December 2015 and December 2014. While the
ratios calculated in accordance with the Standardized
Capital Rules were not applicable until January 2015, the
December 2014 ratios are presented in the table below for
comparative purposes.
As of December
$ in millions 2015 2014
Common shareholders’ equity $ 75,528 $ 73,597
Deductions for goodwill and identifiable
intangible assets, net of deferred tax
liabilities (2,814) (2,787)
Deductions for investments in
nonconsolidated financial institutions (864) (953)
Other adjustments (487) (27)
Common Equity Tier 1 71,363 69,830
Perpetual non-cumulative preferred stock 11,200 9,200
Junior subordinated debt issued to trusts 330 660
Deduction for investments in covered funds (413) —
Other adjustments (969) (1,257)
Tier 1 capital $ 81,511 $ 78,433
Standardized Tier 2 and total capital
Tier 1 capital $ 81,511 $ 78,433
Qualifying subordinated debt 15,132 11,894
Junior subordinated debt issued to trusts 990 660
Allowance for losses on loans and lending
commitments 602 316
Other adjustments (19) (9)
Standardized Tier 2 capital 16,705 12,861
Standardized total capital $ 98,216 $ 91,294
Basel III Advanced Tier 2 and total capital
Tier 1 capital $ 81,511 $ 78,433
Standardized Tier 2 capital 16,705 12,861
Allowance for losses on loans and lending
commitments (602) (316)
Basel III Advanced Tier 2 capital 16,103 12,545
Basel III Advanced total capital $ 97,614 $ 90,978
RWAs
Standardized $524,107 $619,216
Basel III Advanced 577,651 570,313
CET1 ratio
Standardized 13.6% 11.3%
Basel III Advanced 12.4% 12.2%
Tier 1 capital ratio
Standardized 15.6% 12.7%
Basel III Advanced 14.1% 13.8%
Total capital ratio
Standardized 18.7% 14.7%
Basel III Advanced 16.9% 16.0%
Tier 1 leverage ratio 9.3% 9.0%
In the table above:
‰The deductions for goodwill and identifiable intangible
assets, net of deferred tax liabilities, include goodwill of
$3.66 billion and $3.65 billion as of December 2015 and
December 2014, respectively, and identifiable intangible
assets of $196 million (40% of $491 million) and
$103 million (20% of $515 million) as of December 2015
and December 2014, respectively, net of associated
deferred tax liabilities of $1.04 billion and $961 million
as of December 2015 and December 2014, respectively.
Goodwill is fully deducted from CET1, while the
deduction for identifiable intangible assets is required to
be phased into CET1 ratably over five years from 2014 to
2018. The balance that is not deducted during the
transitional period is risk weighted.
‰The deductions for investments in nonconsolidated
financial institutions represent the amount by which the
firm’s investments in the capital of nonconsolidated
financial institutions exceed certain prescribed
thresholds. The deduction for such investments is
required to be phased into CET1 ratably over five years
from 2014 to 2018. As of December 2015 and
December 2014, CET1 reflects 40% and 20% of the
deduction, respectively. The balance that is not deducted
during the transitional period is risk weighted.
‰The deduction for investments in covered funds
represents the firm’s aggregate investments in applicable
covered funds, as permitted by the Volcker Rule, that
were purchased after December 2013. Substantially all of
these investments in covered funds were purchased in
connection with the firm’s market-making activities. This
deduction became effective in July 2015 and is not subject
to a transition period. See Note 6 for further information
about the Volcker Rule.
‰Other adjustments within CET1 and Tier 1 capital
primarily include accumulated other comprehensive loss,
credit valuation adjustments on derivative liabilities, debt
valuation adjustments, the overfunded portion of the
firm’s defined benefit pension plan obligation net of
associated deferred tax liabilities, disallowed deferred tax
assets and other required credit risk-based deductions.
The deductions for such items are generally required to be
phased into CET1 ratably over five years from 2014 to
2018. As of December 2015 and December 2014, CET1
reflects 40% and 20% of such deductions, respectively.
The balance that is not deducted from CET1 during the
transitional period is generally deducted from Tier 1
capital within other adjustments.
Goldman Sachs 2015 Form 10-K 185