TD Bank 2003 Annual Report Download - page 46

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TD BANK FINANCIAL GROUP ANNUAL REPORT 2003 • Management’s Discussion and Analysis44
Risk-weighted assets at year end
(millions of dollars) 2003 2002 2001
Risk- Risk- Risk-
weighted weighted weighted
Balance balance Balance balance Balance balance
Balance sheet assets
Cash resources $ 7,719 $ 1,344 $ 6,538 $ 1,108 $ 5,945 $ 991
Securities purchased under
resale agreements 17,475 235 13,060 282 20,205 324
Securities 79,665 3,686 82,197 6,247 97,194 6,946
Loans (net) 118,058 59,273 122,627 63,965 119,673 66,514
Customers’ liability under
acceptances 6,645 6,400 7,719 7,066 9,122 8,246
Other assets 43,970 5,885 45,899 6,288 35,699 6,342
Total balance sheet assets $273,532 $ 76,823 $278,040 $ 84,956 $287,838 $ 89,363
Off-balance sheet assets
Credit instruments 10,937 14,559 18,350
Derivative financial instruments 5,987 6,259 6,373
Total off-balance sheet assets 16,924 20,818 24,723
Total risk-weighted asset
equivalent – credit risk 93,747 105,774 114,086
– market risk 14,470 14,859 13,032
Total risk-weighted assets $108,217 $120,633 $127,118
Revised capital accord
The Basel Committee on Banking Supervision has published
for consultation the New Basel Capital Accord to replace the
accord originally introduced in 1988 and supplemented in
1996. The underlying principles of the new Accord are
intended to be suitable for application to banks of varying
levels of complexity and sophistication. The proposed Accord
will allow qualifying banks to determine capital levels
consistent with the manner in which they measure, manage
and mitigate risk. The new framework provides a spectrum
of methodologies, from simple to advanced, for the
measurement of both credit and operational risk. More
advanced measurement of risks should result in regulatory
and economic capital being more closely aligned.
By providing a flexible approach to measurement method-
ology, each bank will be able, subject to review by regulators,
to adopt approaches which best fit its level of sophistication
and risk profile. The objective of the framework is to provide
rewards for more rigorous and accurate risk management by
reducing regulatory capital required under weaker or less
sophisticated approaches. While the overall objective of the
new Accord is to neither increase nor decrease the level of
overall capital in the system, some financial institutions will
see an increase in regulatory capital, while others will see a
decrease. The impact will depend upon the approach used by
a particular institution and its own risk profile.
The Bank has prepared project plans to collect, analyze
and report the necessary data and is on track to meet the
requirements of the new Accord. For Canadian banks, the
expected proforma implementation will be for fiscal 2006,
with formal implementation the following year.