Committee Reports::Report No. 10 - Proposed EEC Measures Relating to Solvency Ratios and Own Funds of Credit Institutions and Obligations of Branches of Credit and Financial Institutions to Publish Accounts::26 January, 1989::Appendix


	HOME Baile
	COMMITTEE REPORTS Tuasascálacha Coistí

Committee Reports > List of Committees > Joint > 1989 > Committee on the Secondary Legislation of the European Communities (5th Committee) > Report No. 10 - Proposed EEC Measures Relating to Solvency Ratios and Own Funds of Credit Institutions and Obligations of Branches of Credit and Financial Institutions to Publish Accounts

APPENDIX

Minimum Solvency Ratios Applied by EC Member States

At present solvency ratios are applied to Credit Institutions in all but two Member States (Greece and Portugal). Solvency ratios can take either one of two forms -

(a)a gearing ratio which relates capital to total assets or,

(b)a risk asset ratio which relates capital to assets weighted in accordance with their perceived risk.

Some Member States apply one or other of the ratios while others apply both.

The attached table gives details of minimum levels applied in the various Member States. Care should be taken in making direct comparisons, however, as the definitions of capital, risk assets and gross assets can vary from country to country. In some countries, notably Germany, the definition of capital is very strict i.e., only shareholders’ funds are included.

Member State	Type of Ratio Gearing/Risk Asset	Minimum Level
Ireland	Both	Associated Banks Gearing ratio 6.5% Risk Asset Ratio - none Non-Associated Banks Gearing ratio 4.0% Risk asset ratio set on individual bank basis within range of 7% - 15%
Belgium	Risk Asset	5%
Denmark	Gearing	8%
France	Risk Asset	5%
Germany	Variation of risk Asset	(i)loans and investments must not exceed 18 times eligible capital (5.6%) (ii)holdings of foreign currencies and precious metals must not exceed 30% of eligible capital at close of each day
Greece	None	n/a
Italy	Both	8.0% risk asset 4.4% gearing
Luxembourg	Gearing	3%
Netherlands	Risk Asset (indirectly)	No minimum as such - but different co-efficients are applied to each category of asset from which the minimum capital required is determined. Dutch banks are in general relatively highly capitalised.
Spain	A combination of risk asset and gearing	7.5% risk asset 5.0% gearing
Portugal	None	n/a
UK	Both	The UK authorities do not have global minima. They apply capital requirements on an individual bank basis. UK banks are in general relatively highly capitalised.