Rabobank confirms ECB capital requirements as of January 2020
Rabobank has received notification of the ECB’s final decision concerning the own funds requirements that it has to meet as of 1 January 2020, following the results of the 2019 Supervisory Review and Evaluation Process (SREP).
The decision requires that Coöperatieve Rabobank U.A. (“Rabobank”) maintains a total SREP Capital requirement of 9.75% on a consolidated and unconsolidated basis. The requirement consists of a 8% minimum own funds requirement and a 1.75% Pillar 2 requirement.
The total CET1 minimum requirement is 6.25% consisting of the minimum Pillar 1 requirement (4.5%) and the Pillar 2 requirement (1.75%). In addition, Rabobank should comply with the combined buffer requirements consisting of a Capital Conservation Buffer (2.5%) and a Systemic Risk Buffer imposed by the Dutch Central Bank (“DNB”) of 3% in 2020. This translates into an aggregate 11.75% CET1 requirement as of 1 January 2020 and is equal to the current fully phased in CET1 requirement. Rabobank targets a CET1 ratio of at least 14%.
Since 2017 the Pillar 2 surcharge has been split by the ECB into the aforementioned Pillar 2 requirement and a Pillar 2 guidance. The 11.75% CET1 requirement does not include the Pillar 2 guidance, which is not disclosed. The Pillar 2 guidance is not relevant for the Maximum Distributable Amount (“MDA”).
With a fully loaded CET1 ratio of 15.8% on 30 June 2019, Rabobank already complies with the requirements for 2020. With a Tier 1 ratio of 17.8% and a Total capital ratio of 24.4% on 30 June 2019 Rabobank also comfortably meets its total SREP capital requirements.
Requirement on an unconsolidated basis
The decision also requires that Rabobank maintains a CET1 ratio of 8.75% on an unconsolidated basis. This 8.75% capital requirement includes the minimum Pillar 1 requirement (4.5%), the Pillar 2 requirement (1.75%) and the Capital Conservation Buffer (2.5%). The unconsolidated CET1 ratio of Rabobank amounted to 15.9% on 30 June 2019.
Published: 5 December 2019, 14:45 CET