Wells Fargo 2014 Annual Report Download - page 107

Table 62 presents changes in RWAs for 2014. Effective
January 1, 2014, we commenced transitioning RWAs from Basel
I to Basel III (General Approach) under final rules adopted by
federal banking regulators in July 2013.
Table 62: Analysis of Changes in RWAs
(in millions)
Basel I RWAs at December 31, 2013 $ 1,141,514
Net change in on-balance sheet RWAs:
Investment securities (7,944)
Securities financing transactions 1,984
Loans 45,055
Market risk 13,274
Other 20,831
Total change in on-balance sheet RWAs 73,200
Net change in off-balance sheet RWAs:
Commitments and guarantees 19,687
Derivatives (231)
Other 8,375
Total change in off-balance sheet RWAs 27,831
Total change in RWAs 101,031
Basel III (General Approach) RWAs at December 31, 2014 $ 1,242,545
The increase in total RWAs from December 31, 2013, was
primarily due to increased lending activity.
Table 63 provides information regarding our CET1
calculation as estimated under Basel III using the Advanced
Approach, fully phased-in method.
Table 63: Common Equity Tier 1 Under Basel III (Advanced Approach, Fully Phased-In) (1)(2)
(in billions) December 31, 2014
Common Equity Tier 1 (transition amount) under Basel III $
Adjustments from transition amount to fully phased-in Basel III (3):
Cumulative other comprehensive income
Other (2.8)
Total adjustments (0.4)
Common Equity Tier 1 (fully phased-in) under Basel III (C) $ 136.7
Total RWAs anticipated under Basel III (4) (D) $ 1,310.5
Common Equity Tier 1 to total RWAs anticipated under Basel III (Advanced Approach, fully phased-in) (C)/(D) 10.43%
(1) CET1 is a non-GAAP financial measure that is used by investors, analysts and bank regulatory agencies to assess the capital position of financial services companies.
Management reviews CET1 along with other measures of capital as part of its financial analyses and has included this non-GAAP financial information, and the
corresponding reconciliation to total equity, because of current interest in such information on the part of market participants.
(2) The Basel III CET1 and RWAs are estimated based on the Basel III capital rules adopted July 2, 2013, by the FRB. The rules establish a new comprehensive capital
framework for U.S. banking organizations that implement the Basel III capital framework and certain provisions of the Dodd-Frank Act. The rules are being fully phased in
effective January 1, 2014, through the end of 2021.
(3) Assumes cumulative other comprehensive income is fully phased in and certain other intangible assets are fully phased out under Basel III capital rules.
(4) The final Basel III capital rules provide for two capital frameworks: the Standardized Approach intended to replace Basel I, and the Advanced Approach applicable to certain
institutions. Under the final rules, we will be subject to the lower of our CET1 ratio calculated under the Standardized Approach and under the Advanced Approach in the
assessment of our capital adequacy. While the amount of RWAs determined under the Standardized and Advanced Approaches has been converging, the amount of RWAs
as of December 31, 2014, was based on the Advanced Approach, which was higher than RWAs under the Standardized Approach, and thus resulted in a lower CET1 ratio
compared with the Standardized Approach. Basel III capital rules adopted by the Federal Reserve Board incorporate different classification of assets, with risk weights
based on Wells Fargo's internal models, along with adjustments to address a combination of credit/counterparty, operational and market risks, and other Basel III
elements.
137.1
2.4
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