Capital adequacy
The capital base serves as a buffer against unexpected losses that can arise from risks to which Swedbank is exposed. The rules on capital adequacy – the regulatory capital – express legislators’ opinion of how much capital (capital base) a credit institution, such as a bank, must have in relation to the size of its risk taking expressed in the form of risk weighted assets.
To ensure that it can function well even under unfavourable conditions, Swedbank maintains an extra capital buffer in addition to the legal capital required by law. Capital planning and measures to sustain satisfactory capitalisation are crucial to maintaining the market’s confidence in Swedbank and consequently in retaining access to funding in the capital market.
We conduct stress tests to identify the potential effects of possible, though unlikely, negative scenarios and to assess whether the capital buffer is satisfactory at any given point in time. Given the turbulence and great uncertainty in the global economy, Swedbank’s Internal Capital Adequacy Assessment Process (ICAAP) for 2012 was based on exceptionally negative scenarios. Swedbank’s ICAAP for 2012 shows that the bank has limited risks and is well capitalised for future regulatory changes and the effects of a potentially highly negative scenario.
As of Q4 2011 the Board of Directors decided to withdraw its capital target. The Board of Directors will decide on a new target once the regulatory situation is deemed more stable. In the view of Swedbank’s executive management, we will need a longterm Common Equity Tier 1 ratio of 13 to 15 per cent (Basel 3 incl. IAS19). see more under Financial targets.
Relevant links
- Risk and capital adequacy report
- Risk management 2012 (PDF) Extract from Annual Report
- Updated information about the Group's risks can be found in the interim report and fact book under Financial information and publications.
- Financial Reports
More on capital adequacy
- Note G4 - Internal capital assessment (Annual report 2012)
- Note G4 - Capital adequacy analysis (Annual report 2012)
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