SNS REAAL Statement on Publication of EBA
SNS REAAL notes the announcements made today by the European Banking Authority (EBA) and De Nederlandsche Bank (the Dutch Central Bank) regarding the capital exercise, which demonstrate the following result for SNS Bank N.V. (SNS Bank).
The capital exercise proposed by the EBA and agreed by the Council on 26 October 2011 requires banks to strengthen their capital positions by building up a temporary capital buffer against sovereign debt exposures to reflect current market prices. In addition, it requires them to establish a buffer such that the core Tier 1 ratio reaches a level of 9% by the end of June 2012. The amount of any final capital shortfall identified is based on September 2011 figures. The amount of the sovereign capital buffer will not be revised.
71 banks across Europe, including SNS Bank, were subject to the capital exercise whose objective is to create an exceptional and temporary capital buffer to address current market concerns over sovereign risk and other residual credit risk related to the current difficult market environment. This buffer would explicitly not be designed to cover losses in sovereigns but to provide a reassurance to markets about banks’ ability to withstand a range of shocks and still maintain adequate capital.
Following completion of the capital exercise conducted by the EBA, in close cooperation with the Dutch Central Bank, the exercise has determined that SNS Bank has a capital shortfall of € 159 million which must be addressed by end June 2012.
The difference between the announcement on 27 October 2011 that SNS Bank met the 9% threshold based on the preliminary insights of the EBA and today’s announcement originates in the fact that the current measurement also includes unrealised results on interest rate derivatives connected to the sovereign debt exposures.
SNS Bank will ensure that by the end of June 2012 it will adhere to the 9% core Tier ratio and, to this end, submit a plan to the Dutch Central Bank, in accordance with the EBA procedures. In this plan SNS Bank will set out the proposed mix of actions to meet the required 9% target thereby bringing the shortfall to zero by June 2012.
The capital to be raised and measures to be taken by the bank are designed to restore confidence in market participants, to facilitate banks’ access to the funding markets as well as to put them in the condition to continue providing financial support to the real economy.
The methodology underlying the capital exercise was outlined by the EBA prior to its announcement to ensure consistency across all banks in the EU banking system involved in the exercise.
Recently SNS REAAL has announced its ambition to reach a minimum core Tier 1 ratio of 10% for SNS Bank, taking into account the extra capital charge for systemically important banks. To strengthen its capital position in light of the mentioned ambition, SNS Bank has already undertaken several initiatives including liability management transactions. On 30 November 2011, SNS Bank executed a lower Tier 2 exchange transaction which yielded a net profit of approximately €72 million and strengthened the quality of capital at SNS Bank through the creation of core Tier 1 capital.
Capital ratios at SNS Bank increased in the first months of the fourth quarter of 2011 due to the execution of the lower Tier 2 exchange transaction and the further decrease of the SNS SME and Property Finance loan portfolio. At the end of November 2011, the core Tier 1 ratio of SNS Bank, as determined in accordance with its regular calculation method1 stood at approximately 9.0% versus the previously reported core Tier 1 ratio of 8.6% at the end of September 2011. SNS REAAL will continue to execute its capital release programme, press ahead with the run-off of Property Finance, and explore ways to further improve the performance of its core activities.
1 Based on Basel II, taking into account the 80% floor of Basel I.
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For more information please contact
SNS REAAL Corporate Communications
Roelina Bolding
corporatecommunications@snsreaal.nl
Mobile phone: -31 (0)6 22 60 71 87
Roland Kroes
corporatecommunications@snsreaal.nl
Mobile phone: +31 (0)6 83 24 50 14
SNS REAAL Investor Relations
Jacob Bosscha
jacob.bosscha@snsreaal.nl
Tel: +31 (0)30 291 42 46
Victor Zijlema
victor.zijlema@snsreaal.nl
Tel: +31 (0)30 291 42 47