ING Direct 2013 Annual Report Download - page 340

Capital management continued
REGULATORY REQUIREMENTS
ING BANK
Capital adequacy and the use of regulatory required capital are based on the guidelines developed by the Basel Committee on Banking
Supervision (The Basel Committee) and the European Union Directives, as implemented by the Dutch Central Bank (DNB) for supervisory
purposes. The minimum Tier 1 ratio is 4% and the minimum total capital ratio (known as the BIS ratio) is 8% of all risk-weighted assets.
Basel II
As of 2008 ING Bank publishes risk-weighted assets (RWA), Tier 1 and BIS capital and the accompanying capital ratios based on Basel II
data only. In addition, ING publishes the minimum required capital level according to Basel II and according to the Basel I floor. As of 2009
the Basel I floor is based on 80% of Basel I RWA. The minimum requirements according to Basel II and Basel I are both compared to total
BIS available capital according to Basel II.
Capital position of ING Bank
2013 2012
Shareholders’ equity (parent) 32,805 34,963
Minority interests (1) 1,065 959
Subordinated loans qualifying as Tier1 capital (2) 5,123 6,774
Goodwill and intangibles deductible from Tier1 (1) –1,057 –1,242
Deductions Tier1 (3) –1,082 –991
Defined benefit remeasurement (4) 2,671 1,860
Revaluation reserve (5) –1,293 –2,195
Available capital – Tier1 38,232 40,129
Supplementary capital – Tier2 (6) 9,345 8,132
Available Tier3 funds
Deductions (3) –1,082 –991
BIS capital 46,496 47,270
Risk-weighted assets 282,503 278,656
Core Tier1 ratio 11.72% 11.97%
Tier1 ratio 13.53% 14.40%
BIS ratio 16.46% 16.96%
Required capital based on BaselI floor (7) 26,913 28,767
BIS ratio based on Basel I floor (7) 13.82% 13.15%
(1) According to the regulatory definition.
(2) Subordinated loans qualifying as Tier 1 capital have been placed by ING Groep N.V. with ING Bank N.V.
(3) For further details, see the table below.
(4)
As result of the revision of IAS 19, this number is EUR 154 million higher than was presented in the 2012 annual report, resulting in slightly higher capital
ratios.
(5) Includes revaluation debt securities, revaluation reserve cash flow hedge and the revaluation reserves excluded from Tier 1 as described in ING’s Capital base
table.
(6) Includes eligible lower Tier 2 loans and revaluation reserves equity and real estate revaluations removed from Tier 1 capital.
(7) Using 80% of Basel I Risk-Weighted Assets.
Basel III
In 2010 the Basel Committee on Banking Supervision issued new solvency and liquidity requirements, which will supersede Basel II. In
Europe these requirements start to apply gradually as of 1 January 2014, with the full requirements being effective as of 1 January 2018.
How the table above would be impacted by the Basel III rules is shown in the Pillar 3 disclosure section.
Deductions Basel III
2013 2012
Expected loss in excess of IFRS provisions after tax 1,293 1,085
Insurance entities >10% 33 28
Financial institutions >10% 837 868
Securitisation first loss
Total deductions Basel II 2,163 1,981
50% deductions Basel II 1,082 991
338 ING Group Annual Report 2013