Sweden's Svenska Handelsbanken AB (publ) experienced the largest drop in capital ratio among large European banks in the fourth quarter of 2018, both on a quarterly and yearly basis.
Its fully loaded common equity Tier 1 ratio shed 489 basis points over the three months ended Dec. 31, 2018, and 595 basis points over the whole of 2018, to end up at 16.79%, data from S&P Global Market Intelligence shows. The decline is mainly attributed to a risk-weight floor of 25% for its Swedish mortgage loan exposures, which pushed up its risk exposure amount.
Finland-based Nordea Bank Abp saw its ratio drop by 480 basis points quarter over quarter. In the sample of 41 banks, 19 reported a decline in ratio over this period.
U.K.-based Nationwide Building Society had the strongest ratio, at 31.50%, and Finland's OP Financial Group was second with 20.50%. Austria's Raiffeisen Bank International AG, with a ratio of 13.40%, saw the most quarter-over-quarter improvement at 110 basis points.
The metric quantifies a bank's CET1 capital as a percentage of risk-weighted assets, and banks in the region must have CET1 ratios of at least 7% by 2019 under Basel III conditions, comprising 4.5% common equity Tier 1 ratio and a 2.5% capital conservation buffer. Certain banks might face additional local capital buffer obligations.
See a section dedicated to capital adequacy for your bank. Search for the company in the top search box and go to the "Capital Adequacy" section, housed under the Templated Financials on the left-hand panel. Here is an example for Banco Santander SA.
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