At the end of July Estonian FSA, Finantsinspektsioon, presented to LHV Group and LHV Bank this year’s outcome of Supervisory Review and Evaluation Process (SREP), which sets additional capital requirements for capital adequacy calculation. In comparison with last year there are some changes in composition of capital charges.
According to the decision of FSA LHV Group should on consolidated level keep in additional capital in the amount of 1.01% (last year 1.89%), from which at least 0.37% should be covered by Core Tier 1 capital and at least 0.49% should be covered by Tier 1 capital.
In a council meeting on 18 August the Supervisory Board of LHV Group based on the FSA decision and adding to it internal buffers decided to set total CAD target ratio at 15.06% (previously 16.19%), Tier 1 ratio at 12.29% (previously 13.29%) and Core Tier 1 ratio to 10.61% (previously not set).
Underneath is the target split into components:
| Core Tier 1 | Tier 1 | Total CAD | |
| Base requirement | 4.50% | 6.00% | 8.00% |
| Capital conservation buffer | 2.50% | 2.50% | 2.50% |
| Systemic importance buffer (O-SII) | 0.00% | 0.00% | 0.00% |
| Systemic risk buffer | 0.92% | 0.92% | 0.92% |
| Discretionary counter-cyclical buffer | 0.00% | 0.00% | 0.00% |
| Pillar II additional capital charge (SREP) | 0.37% | 0.49% | 1.01% |
| Total minimal regulatory requirement | 8.29% | 9.91% | 12.43% |
| Additional internally decided buffers | 2.32% | 2.38% | 2.63% |
| Group’s internal capitalization targets | 10.61% | 12.29% | 15.06% |
Priit Rum
Communication Manager
Telephone: +372 502 0786
Email: priit.rum@lhv.ee