Ally Bank 2012 Annual Report Download - page 166

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A banking institution meets the regulatory definition of “well-capitalized” when its Total risk-based capital ratio equals or exceeds 10%
and its Tier 1 risk-based capital ratio equals or exceeds 6%; and for insured depository institutions, when its leverage ratio equals or exceeds
5%, unless subject to a regulatory directive to maintain higher capital levels.
The banking regulators have also developed a measure of capital called “Tier 1 common” defined as Tier 1 capital less noncommon
elements, including qualifying perpetual preferred stock, minority interest in subsidiaries, trust preferred securities, and mandatory
convertible preferred securities. Tier 1 common is used by banking regulators, investors and analysts to assess and compare the quality and
composition of Ally's capital with the capital of other financial services companies. Also, bank holding companies with assets of $50 billion
or more, such as Ally, must develop and maintain a capital plan annually, and among other elements, the capital plan must include a
discussion of how we will maintain a pro forma Tier 1 common ratio (Tier 1 common to risk-weighted assets) above 5% under expected
conditions and certain stressed scenarios.
On October 29, 2010, Ally, IB Finance Holding Company, LLC, Ally Bank, and the FDIC entered into a Capital and Liquidity
Maintenance Agreement (CLMA). The CLMA requires capital at Ally Bank to be maintained at a level such that Ally Bank's leverage ratio is
at least 15%. For this purpose, the leverage ratio is determined in accordance with the FDIC's regulations related to capital maintenance.
The following table summarizes our capital ratios.
2012 2011 Required
minimum
Well-
capitalized
minimum
December 31, ($ in millions)Amount Ratio Amount Ratio
Risk-based capital
Tier 1 (to risk-weighted assets)
Ally Financial Inc. $ 20,232 13.13% $ 21,067 13.65% 4.00% 6.00%
Ally Bank 14,136 16.26 12,953 17.42 4.00 6.00
Total (to risk-weighted assets)
Ally Financial Inc. $ 21,669 14.07% $ 22,664 14.69% 8.00% 10.00%
Ally Bank 14,827 17.06 13,675 18.40 8.00 10.00
Tier 1 leverage (to adjusted quarterly average
assets) (a)
Ally Financial Inc. $ 20,232 11.16% $ 21,067 11.45% 3.00–4.00% (b)
Ally Bank 14,136 15.30 12,953 15.50 15.00 (c) 5.00%
Tier 1 common (to risk-weighted assets)
Ally Financial Inc. $ 10,749 6.98% $ 11,585 7.51% n/a n/a
Ally Bank n/a n/a n/a n/a n/a n/a
n/a = not applicable
(a) Federal regulatory reporting guidelines require the calculation of adjusted quarterly average assets using a daily average methodology.
(b) There is no Tier 1 leverage component in the definition of a well-capitalized bank holding company.
(c) Ally Bank, in accordance with the CLMA, is required to maintain a Tier 1 leverage ratio of at least 15%.
At December 31, 2012, Ally and Ally Bank were “well-capitalized” and met all capital requirements to which each was subject.
Basel Capital Accord and Other Regulatory Matters
In June 2012, the U.S. federal banking agencies released three notices of proposed rulemaking (NPRs) and a Market Risk Final Rule
(effective January 1, 2013). The three NPRs represent substantial revisions to the regulatory capital rules for banking organizations. If
adopted, as proposed, these NPRs would incorporate the international Basel III capital framework, as well as implement certain provisions of
the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). On August 8, 2012, the federal banking agencies
extended the public comment period on the NPRs to October 22, 2012.
Highlights of the NPRs include a revised definition of capital in order to implement the Basel III reforms as well as higher minimum
capital ratios that will apply to most banking organizations and would be phased in between 2013 and 2019 consistent with the Basel
Committee's international implementation time line. The NPRs remove the use of credit ratings from both the standardized and advanced
approaches, as required by the Dodd-Frank Act. In addition, the standards in the existing Basel I risk-based capital rules, which the NPRs
refer to as the “general risk-based capital requirements,” would be revised, effective January 1, 2015, to include a more risk-sensitive risk-
weighting approach. On November 9, 2012, the federal banking agencies announced that the Basel III proposals would not become effective
on January 31, 2013.
The Market Risk Final Rule, which amends the calculation of market risk capital, only applies to banking organizations with significant
trading assets and liabilities. We do not currently meet the minimum requirements for application of the Market Risk Rule; accordingly, this
rule is not currently applicable to us.
Table of Contents
Notes to Consolidated Financial Statements
Ally Financial Inc. • Form 10-K