Capital management
At 2014 year-end, Banco Sabadell had a core capital (CETier 1) ratio of 11.7%.
In 2014, Banco Sabadell continued to pursue the active capital management policy it had been following for the last few years, with major implications for its future growth.In the last four years, the Bank increased its capital base by issuing securities qualifying as first-tier capital; as a result its capital resources grew by more than €5,000 million (T5):
| €Mn. | |||
|---|---|---|---|
| Amount | Impact on capital | ||
| September 2010 | Equity issue | 196 | +11 pb de Core Tier I |
| February 2011 | Debt-for-equity swap (equity via book-building and redemption of preference shares and subordinated debt) | 411 | +68 pb de Core Tier I |
| February 2012 | Exchange of preference for common shares | 785 | +131 pb de Core Tier I |
| March 2012 | Equity issue | 903 | +161 pb de Core Tier I |
| July 2012 | Exchange of Banco CAM preference shares and subordinated debt for shares | 1.404 | +186 pb de Core Tier I |
| September 2013 | Accelerated placement of shares and rights issue | 1.383 | +178 pb de Core Tier I |
| Note: The impact on capital (in basis points) is calculated using year-end data, which have varied significantly as the Group has expanded in recent years. |
T5 Capital actions
The result is that the Bank has been able to maintain a sound capital position, as evidenced by the year-end capital ratios (T6).
Capital management is the result of an ongoing capital planning process. This process considers expected economic, regulatory and industry performance as well as adverse scenarios. It factors in projected capital consumption in the various businesses under a number of scenarios as well as market conditions that may determine the efficacy of measures that may be taken. The process is conducted in line with the Bank's strategic goals and the pursuit of attractive returns for shareholders, while always ensuring that own funds are sufficient to attend to the risks inherent in the business.
As a result of these actions and events, Banco Sabadell increased its core equity Tier 1 ratio at 2014 year-end to 11.7%, or 11.5% if the Basel III standards required in 2018 were applied (i.e. "fully loaded"). The BIS ratio was 12.8%.
The capital requirements regulation and directive (CRD IV/CRR), which govern minimum capital requirements for Spanish credit institutions, on an individual and consolidated basis, and the way in which own funds are determined, came into force on 1 January 2014; they also regulate the various processes by which banks must evaluate their own capital and the disclosures to the market.
Under CRR, credit institutions must have a capital ratio of at least 8% at all times. Nevertheless, under the new framework, regulators may require banks to have additional capital.
| Thousand euro | |||
|---|---|---|---|
| 2014 | 2013 | Year-on-year change (%) | |
| Capital | 503,058 | 501,435 | 0.32 |
| Reserves | 8,855,717 | 8,891,722 | (0.40) |
| Convertible bonds | — | — | — |
| Non-controlling interests | 28,919 | 40,845 | (29.20) |
| Deductions | (684,483) | (599,027) | 14.27 |
| Core capital resources | 8,703,211 | 8,834,975 | (1.49) |
| Core capital (%) | 11.7 | 11.0 | |
| Preference shares, convertible bonds and deductions | — | — | — |
| Tier one resources | 8,703,211 | 8,834,975 | (1.49) |
| Tier I (%) | 11.7 | 11.0 | |
| Tier two resources | 838,681 | 885,874 | (5.33) |
| Tier II (%) | 1.1 | 1.1 | |
| Capital base | 9,541,892 | 9,720,849 | (1.84) |
| Minimum capital requirement | 5,953,425 | 5,830,103 | 2.12 |
| Capital surplus | 3,588,467 | 3,890,746 | (7.77) |
| BIS Ratio (%) | 12.8 | 12.1 | 5.77 |
| Risk Weighted Assets (RWA) | 74,417,813 | 80,189,579 | (7.20) |
| (*) | For comparison purposes, the 2013 information has been calculated based on Basel III requirements and not restated to take account of early application of IFRIC 21. |
T6BIS capital ratios