JP Morgan Chase 2014 Annual Report Download - page 151

JPMorgan Chase & Co./2014 Annual Report 149
The following chart presents the Basel III minimum CET1 capital ratio during the transitional periods and on a fully phased-in
basis under the Basel III rules currently in effect. It is the Firm’s current expectation that its Basel III CET1 ratio will exceed the
regulatory minimums, both during the transition period and upon full implementation in 2019 and thereafter.
On December 9, 2014, the Federal Reserve issued a Notice
of Proposed Rulemaking (“NPR”) that would establish a
new capital surcharge across all tiers of regulatory capital
for G-SIBs in the U.S., including the Firm. The Firm
estimates its fully phased-in G-SIB surcharge (based upon
data as of December 31, 2013) would be 4.5% under the
NPR, compared to a fully phased-in G-SIB surcharge of
2.5% as estimated under the Basel III rules currently in
effect.
Basel III Advanced Fully Phased-In
Based on the U.S. capital rules currently in effect, Basel III
capital rules will become fully phased-in on January 1,
2019, at which point the Firm will continue to calculate its
capital ratios under both the Basel III Standardized and
Advanced Approaches, and the Firm will continue to have
its capital adequacy evaluated against the approach that
results in the lower ratio. While the Firm has recently
imposed Basel III Standardized Fully Phased-In RWA limits
on the lines of business in adapting its capital framework,
the Firm currently expects to manage each of the
businesses (including line of business equity allocations), as
well as the corporate functions, primarily on a Basel III
Advanced Fully Phased-In basis.
The Firm’s capital, RWA and capital ratios that are
presented under Basel III Advanced Fully Phased-In (and
CET1 under Basel I as of December 31, 2013), are non-
GAAP financial measures. However, such measures are used
by bank regulators, investors and analysts to assess the
Firm’s capital position and to compare the Firm’s capital to
that of other financial services companies.
The Firm’s estimates of its Basel III Advanced Fully Phased-
In capital, RWA and capital ratios and of the Firm’s,
JPMorgan Chase Bank, N.A.’s, and Chase Bank USA, N.A.’s
SLRs reflect management’s current understanding of the
U.S. Basel III rules based on the current published rules and
on the application of such rules to the Firm’s businesses as
currently conducted. The actual impact on the Firm’s capital
ratios and SLR as of the effective date of the rules may
differ from the Firm’s current estimates depending on
changes the Firm may make to its businesses in the future,
further implementation guidance from the regulators, and
regulatory approval of certain of the Firm’s internal risk
models (or, alternatively, regulatory disapproval of the
Firm’s internal risk models that have previously been
conditionally approved).
The following table presents the estimated Basel III
Advanced Fully Phased-In Capital ratios for JPMorgan Chase
at December 31, 2014. Also included in the table are the
regulatory minimum ratios currently expected to be in
effect beginning January 1, 2019.
Basel III
Advanced Fully
Phased-In
December 31,
2014
Fully phased-in
minimum
capital ratios(a)
Fully phased-in
well-capitalized
ratios(b)
Risk-based capital
ratios:
CET1 capital 10.2% 9.5% 6.5%
Tier 1 capital 11.4 11.0 8.0
Total capital 12.8 13.0 10.0
Leverage ratio:
Tier 1 7.5 4.0 5.0
SLR 5.6 3.0 5.0
(a) Represents the minimum capital ratios applicable to the Firm under
fully phased-in Basel III rules currently in effect.
(b) Represents the minimum Basel III Fully Phased-In capital ratios
applicable to the Firm under the PCA requirements of FDICIA.