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ABSA GROUP LIMITED - Basel II Pillar 3 Disclosure

Release Date: 22/11/2012 09:00
Code(s): ASA     PDF:  
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Basel II Pillar 3 Disclosure

ABSA GROUP LIMITED
(Incorporated in the Republic of South Africa)
(Registration number: 1986/003934/06)
ISIN: ZAE000067237
JSE share code: ASA
Issuer code: AMAGB
(Absa or Absa Group)


ABSA GROUP – BASEL II PILLAR 3 DISCLOSURE


Absa, together with all registered banks, is required to comply with the Basel II Capital
Accord (Basel II), effective 1 January 2008. Basel II is divided into three pillars, namely
Pillar 1 (minimum capital requirements); Pillar 2 (supervisory review process) and Pillar 3
(market discipline).

This announcement is made in accordance with the requirements of Pillar 3. The
purpose of Pillar 3 is to complement the minimum capital requirements and the
supervisory review process of Basel II. The minimum set of disclosure requirements is
intended to allow market participants to assess key pieces of information on the scope of
application, capital, risk exposures, risk assessment processes, and hence the capital
adequacy of the institution.

In accordance with Regulation 43(1) (e) (ii) of the regulations relating to banks, the
minimum requirements of the quantitative information to be disclosed to the public on a
quarterly basis are:
    - primary capital, including the primary capital adequacy ratio;
    - total capital, including the total capital adequacy ratio;
    - the components of capital;
    - the total required amount of capital and reserve funds; and
    - any risk exposure or other item that is subject to rapid or material change.

The disclosure required semi-annually and annually is more comprehensive than the
quarterly requirements as it encompasses both quantitative and qualitative information.

Absa Group is well capitalised above minimum regulatory requirements and internal
board target capital ranges with Tier 1 Ratio of 13.03% and Total Capital Adequacy
Ratio of 15.38% as at 30 September 2012. Absa Group’s Total Capital Adequacy Ratio
remained strong following the call on the first optional redemption date of the R1.5bn
AB05 bond, in September 2012. Furthermore, Absa Group is expected to remain
adequately capitalised after the full implementation of Basel III.

The table below represents the consolidated regulatory capital position for the Absa
Group as at 30 September 2012 (Quarter 3, 2012).
                                                                   ABSA GROUP
                                                               30 SEP         30 JUN
                                                                 2012           2012
                                                                  Rm              Rm
Qualifying capital

Primary capital
  Share capital and reserves (Note 2)                          51,916         52,285
  Preference share capital and premium                          4,644          4,644
  Non-controlling interest – ordinary shares                    1,255          1,391
  Less: Deductions                                              2,928          3,057

Total Primary Capital                                          54,887         55,263

Secondary capital
  Debt instruments                                             11,111         12,611
  General allowance for credit impairment, after                   32             31
deferred tax: Standardised approach
  Less: Deductions                                              1,218          1,374

Total Secondary capital                                         9,925         11,268


Total qualifying capital and reserve funds                     64,812         66,531

Capital adequacy ratios (Note 3)

 Total capital adequacy ratio                                   15.38          15.60
 Primary capital ratio                                          13.03          12.96

                                                                      30 Sep 2012

Minimum Required Capital per Risk type:
                                                   Pillar 1   Pillar 2a         Total

Credit Risk                                        24,701        4,632         29,333
Operational Risk                                    4,863          912          5,775
Market Risk                                         1,002          188          1,190
Equity Risk                                         1,912          358          2,270
Other                                               1,224          230          1,454

Total minimum required capital and reserve         33,702        6,320         40,022
funds
Total Minimum Required Capital Ratio (Note 4)       8.00%        1.50%          9.50%

                                                                          30 Jun 2012

Minimum Required Capital per Risk type:
                                                   Pillar 1   Pillar 2a        Total

Credit Risk                                        24,939        4,676        29,615
Operational Risk                                    4,863          912         5,775
Market Risk                                         1,068          201         1,269
Equity Risk                                         1,909          358         2,267
Other                                               1,337          250         1,587

Total minimum required capital and reserve         34,116        6,397        40,513
funds
Total Minimum Required Capital Ratio (Note 4)        8.00%       1.50%         9.50%

Notes:
1) The figures above have not been audited.
2) Share capital and reserves excludes unappropriated profits. The capital adequacy
   ratios disclosed in Absa’s results announcements include unappropriated profits.
3) The 2012 Absa Group Board approved target capital ranges are 12,50%-14,00% for
   the Total and 9,50%-11,00% for the Core Tier 1 Capital Adequacy Ratios (inclusive
   of unappropriated profits). Absa Group has complied with these internal capital
   ranges over the reporting period.
4) Total minimum capital and reserve funds have been reported at 9.5%, in terms of
   Directive 05/2011 issued in terms of section 6(4) of the Banks Act, 1990

Johannesburg
22 November 2012


Enquiries:
Alan Hartdegen
Head: Group Investor Relations
(+2711) 350-2598
E-mail: Alan.Hartdegen@absa.co.za

Lead Sponsor:
J.P. Morgan Equities South Africa Proprietary Limited

Joint Sponsor:
Absa Bank Limited
Corporate and Investment Banking Division

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