Own funds

Own funds

Leaders in capital adequacy

The capital management system at Bankinter, its business model and prudent risk profile have helped the entity to retain a leadership position in terms of capital adequacy once again. The results of stress tests performed in 2018 confirm that the entity is one of the most resistant in Europe. Bankinter obtained the best result of banks traded on the Ibex 35 in stress tests run by the ECB on entities under its direct supervision. In comparison with the data made public by the 48 entities analysed by the EBA, Bankinter places second across Europe for the lowest impact on capital adequacy under the stress scenario.

The results obtained in the exercise reflect the strong position of Bankinter in terms of capital and its resilience to the severe scenarios proposed. This solid position is also reflected in the capital decision by the European Central Bank (ECB). The CET1 ratio (greatest quality capital) required from Bankinter for 2018 was 7.125%, the smallest of Spanish banks and among the lowest in Europe.

In addition, the company has one of the highest CET 1 levels and best quality of Spanish banks (11.75% at the end of 2018), so it amply complies (almost five points difference) with regulatory requirements. As a result, the Bank can freely decide on dividend payments, variable remuneration or hybrid instrument coupons such as Additional Tier 1 (AT1) issues.

New accounting regulations

On the other hand, in 2018, the new IFRS 9 accounting regulation came into force, which represents a significant change in the classification and assessment of specific balance sheet items. Despite this, the impact in terms of capital adequacy was positive, with the CET1 ratio improving by 42 basis points. Bankinter has chosen not to apply the transitional adjustments available that mitigate the impact on capital of the increase in provisions caused by the adoption of this measure.

Looking ahead to 2019, Bankinter is waiting for the European Single Resolution Board to communicate its decision regarding the Minimum Requirement for Own Funds and Eligible Liabilities (MREL), a buffer of instruments with loss-absorption capacity that can be used in case of difficulties. The MREL requirements (both its level and the characteristics of the liabilities considered as eligible) are specific for each bank and will in part depend on the entity's capital policy and issue of other eligible instruments during the financial year.

The banking sector is also awaiting the approval and publication of amendments to the capital adequacy and resolution regulation in the European Union. This new regulation seeks to implement the most recent international standards published by the Basel Banking Supervision Committee and address a number of shortcomings in current regulations to contribute to the stability of the financial sector.

Against this backdrop, Bankinter's goal for 2019 is to continue actively managing its own funds, in order to strengthen its leading position in terms of capital adequacy in the Spanish banking sector and ensure the highest quality of its capital.

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