rathbone pillar 3 2013 - final

7/29/2019 Rathbone Pillar 3 2013 - Final

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Pillar 3 2013

Rathbone Brothers Plc

Pillar III disclosures

July 2013


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Pillar 3 2013

ContentsPage

1 Corporate background 3

2 Risk management 5

3 Capital resources 9

4 Capital requirements 11

5 Credit risk 14

6 Standardised approach to credit risk 18

7 Interest rate risk in the banking book 20

8 Non-trading book exposures in equities 21

9 Remuneration code 22

10 Disclosure 23

Appendices 24


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Pillar 3 2013

1. Corporate backgroundRathbone Brothers Plc is a leading independent provider of high-quality, personalised investment andwealth management services for private clients, charities and trustees. This includes discretionary

investment management, unit trusts, tax planning, trust and company management, pension advice

and banking services.

The Group is organised into two operating divisions: Investment Management (including Banking, Pension

& Advisory services and Trust & Tax services) and Unit Trusts.

Investment ManagementInvestment Management teams provide primarily discretionary investment management services to private

investors and charities with portfolios held in discretionary accounts, trust structures, ISA accounts or self-

invested personal pensions (SIPPs) from offices in the UK and Jersey. The service offered is bespoke with a

well-researched process servicing individual client needs.

Fees and charges are transparent, with the majority of clients having either a fee and commission-based or a

fee-based service with securities held in a Rathbone nominee company and the cash component of the

portfolio held by Rathbone Investment Management Limited, an authorised banking institution. At 30 June

2013, funds under management were 18.46bn. Within the Investment Management division, the primarycompany is Rathbone Investment Management Limited which has one trading subsidiary, Rathbone

Investment Management International Limited.

The investment management division also includes Rathbone Pension & Advisory Services Limited which


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Pillar 3 2013

Corporate governanceThe Plc Board meets a minimum of seven times per year with one meeting devoted entirely to strategicissues. In months where no formal board meeting is scheduled, an informal meeting of the non-executive

directors and the Chairman and Group Chief Executive is held. The five principal Plc Board committees are

the Executive, Audit, Remuneration, Group Risk and Nomination Committees. In addition to these

committees are the five Plc Executive sub-committees; Group Programme Board, Business Continuity,

Training, Social & Environmental and New Products & Services. Most of these committees have Groupexecutive director representation.

The RIM Board meets every other month. The principal RIM committees are the Management, Client and

Investment Committees as well as the Banking Committee. All of these committees have executive director

representation.

Rathbone Brothers Plc is the parent company of the Rathbone Group and is required to produce aconsolidated return to assess its capital resources and capital requirements. This is similar to the statutory

financial statements produced for the annual Report and Accounts except for the exclusion of one subsidiary,

Harlequin Insurance PCC Limited Cell RAT36 (Harlequin) and the RUTM Employee Benefit Trust

(EBT). Harlequin is a Guernsey-incorporated captive insurance vehicle used to self-insure the excess on

insurance policies held by the Group and the EBT is a separate legal entity which holds cash, Plc shares and

RUTM units which will be used in future years to settle employee share based payment transactions. Both

are excluded for regulatory reporting purposes.


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Pillar 3 2013

2. Risk managementRathbones has a clear risk management framework, the key objective of which is to identify andmanage risk within a Board-approved risk appetite.

2.1 Overview of framework

The Board is responsible for the system of risk management and governance framework in place andbelieves the most effective way of managing risks is by embedding risk management throughout the

organisation. This is achieved by ensuring that all identified risks are owned by management, business units

and specific committees who all have the responsibility for risk identifying, evaluating and managing risk.

Committees within the governance framework report through the risk management framework to the Group

Risk Committee, which takes a more holistic view of risk, defining risk appetite, identifying trends and

correlations and providing guidance to other committees and to the Board. This approach allows for risk

decisions to be taken at the most appropriate level and also be subject to robust review and challenge.

The Group Risk Committee is chaired by Kathryn Matthews, non-executive director. Membership of the

committee comprises three non-executive directors, with other parties attending by invitation when required.

The committee meets on a quarterly basis.

The responsibilities of the Group Risk Committee include:

advising the Board on the Groups overall risk appetite and risk strategy, taking into account thecurrent and prospective macroeconomic and financial environment;

overseeing the current risk exposures of the Group;i i h i k


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Pillar 3 2013

The 15 Level 2 risk categories are listed as follows:

Risk area Risk definition ICAAP

Financial risks

CreditRisk associated with one or more counterparties failingto fulfil its contractual obligations, including stocksettlement

Credit risk

Liquidity

Risk of insufficient financial resources to meet

obligations as they fall due, or can only secure access tosuch resources at excessive cost. Pillar II

MarketRisk that earnings or capital will be adversely affectedby changes in the level or volatility of interest rates,foreign currency exchange rates or market prices.

Pillar II

PensionRisk that the obligation to fund any deficit arising fromdefined benefit schemes materially affects dividend

reserves and capital.

Pillar II

Business risks

Business modelRisk that the business model does not respond in anoptimal manner to changing market conditions such thatsustainable growth or market share is adversely affected.

Pillar II

Performance &advice

Risk of inappropriate financial or investment advice,inadequate documentation, unsuitable portfolios or

inadequate performance failing to meet our clientsinvestment and/or other objectives or expectations.

Operational r isk

Regulatory

Risk that the introduction of new regulation or changesto interpretation or enforcement of existing regulation,

materiall affects the b siness model ser ices or Operational r isk


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Pillar 3 2013

Approximately 39 detailed Level 3 risks sit underneath, and are allocated into, the 15 Level 2 risk categories.

These Level 3 risks feed into the risk register, from which a Top 10of Group risks are produced based on

specific criteria, which include the ranked risk rating, a subjective view of the Group Executive and a

combination from both listings. This is a moderated top 10 that the Group Risk Committee opines on andreport to the Board as their considered view. The risk register is subject to challenge by the Group Risk

Committee as a standing agenda item at each quarterly meeting. The committee is also provided with some

of the key performance & risk indicators and management information used to monitor risks and the

business. This information is also provided to the Board and other committees within the governance

framework. The Group Risk Committee also reviews a Watch list of current issues and longer-termconsiderations which are either emerging issues or short term in nature but are sufficiently material to

warrant focused attention.

Detailed Level 3 risks identified in each business unit are recorded on their risk register, with overall

responsibility for each business area lying with a member of the Group Executive. The day-to-day

monitoring and management of these risks remains the responsibility of senior employees and committees

within the governance framework. The risk scoring methodology adopted by Rathbones and approved by the

Group Risk Committee, assesses each risk using a 1 4 scoring system. Each Level 3 risk is rated byassessing both the probability of the risk occurring and its impact should it occur. A residual risk score isthen derived taking into account an assessment of the internal control environment or related insurance. Each

business unit reports back any changes (as required or at least quarterly) to their risk registers through to the

risk team, who assess the changes and report material issues quarterly to the Risk Management Committee

and Group Risk Committee. Any material issues identified during this period will be reported through to the

Group Executive which meets monthly.

2 3 R G


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Pillar 3 2013

The Finance department produces management information including profit and loss accounts for business

areas and departments, balance sheets, capital calculations and forecasts, controls and budget variance

reports. Other departments, particularly Operations, also produce extensive MI, which is central to the risk

management process. The Group produces detailed one year expense and capital budgets in November for

the following year and updates its full year forecast results on a monthly basis. This information assists theGroup in capital management and regulatory capital planning. The Finance department is responsible for the

financial regulatory returns within the Group, with key ratios being calculated, and circulated, on a daily

basis and formally reviewed by the Banking Committee on a monthly basis.

As a consequence of the Groups focus on specific markets, various economies of scale have been achieved,most notably centralised Operations, Technology and Compliance. Expansion of the scale of these functions

can therefore be managed so as to maintain their integrity and ensure that the correct disciplines arefollowed. The Board is confident that there is sufficient scope in the core business to accommodate

significant increases in volumes as they may arise. This all combines to form what the Board believes to be a

very robust and tightly managed control environment.


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Pillar 3 2013

3. Capital resourcesA summary of the Groups and RIMs capital resources at 31 December 2012 is shown in the following table

(000s):

Group RIM

Tier 1

Permanent ordinary share capital 2,298 1,825

Share premium 62,159 35,435

Retained earnings(1) 134,756 94,456

Other Tier 1 reserves (2) 31,834 -

Adjustment to IFRS pension liability (10,326) -

Deductions (3) (104,280) (64,501)

Total tier 1 after deductions 116,441 67,215

Tier 2

Revaluation reserve (4) 2,947 -

Deduction Material holdings (5) (1,014) (1,468)

Subordinated loan(6) - 15,000

Total tier 2 after deductions 1,933 13,532


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Pillar 3 2013

Common Equity Tier 1 ratioThe Common Equity Tier 1 ratio is calculated in line with Basel III regulations for banks, and makesreference to a total risk exposure amount. The total risk exposure amount includes the risk-weighted

exposure amount in relation to the foreign exchange position risk requirement for market risk and the

operational risk capital component, in line with other credit institutions.

Group Common Equity Tier 1 ratio as at 31 December 2012 was 20.2% (2011: 16.2%).

RIM Common Equity Tier 1 ratio as at 31 December 2012 was 11.3% (2011: 9.2%).

Risk-weighted assets are more fully detailed in Appendices 1 and 3 on pages 24 and 26.

See Appendices 2 and 4 on pages 25 and 27 for an explanation of the Basel III impact on Group and RIM

capital and a breakdown of the calculation of the total risk exposure amount.


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Pillar 3 2013

4. Capital requirementsPillar I: Capital resources requirementThe capital resources requirement is the sum of the credit risk capital requirement, the market risk capital

requirement and the operational risk capital requirement (000s):

Group RIM

Credit risk capital requirement 31,570 30,029

Market risk capital requirement 146 86

Operational risk capital requirement 19,365 16,525

Total capital resources requirement 51,081 46,640

Credit riskCredit risk is the risk that unexpected losses may arise as a result of the Group's marketcounterparties or borrowers failing to meet their obligations to repay outstanding balances.

The Banking Committee has primary responsibility for the management of credit risk. It is a sub-committeeof Rathbone Investment Management Limited and is chaired by the Group Finance Director. The Committee

meets each month and has additional meetings at other times when required.


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Pillar 3 2013

The principal source of credit risk to Rathbones arises from placing funds with, and holding interest-bearing

securities issued by, a range of high quality financial institutions and money market funds. Investments are

spread to avoid excessive exposure to any individual counterparty. The associated credit risk capital charge

for these assets is included in the table above under Institutions, Short term claims on institutions (the

latter being those with less than three months to maturity) and Collective Investment Undertakings. Thisrepresents 72% of the total credit risk capital component for Group and 74% for RIM.

The charge for retail exposures represents a further 14% of the total credit risk capital component for Group

and 15% for RIM and arises primarily from RIMs client lending activity. This activity is a low risk service

offered to assist Investment Management clients who are asset rich but have short to medium term cashrequirements. Loans are generally made on a fully secured basis against diversified portfolios held in

Rathbones nominee name. For the purpose of the credit risk calculation no mitigation has been taken on thevalue of any security held against the loans

The charge for other items relates to exposures in the form of tangible fixed assets, off-balance sheet

guarantees, prepayments & accrued income and deferred tax assets.

The counterparty risk capital component represents the marked-to-market exposure of any trades undertakenon behalf of investment management clients which either remain unsettled after their due delivery date orwhere settlement is deferred until receipt of stock certificates. Forward Rate Agreements (FRAs) are used

occasionally to mitigate the effect of short term interest rate risk in the banking book, and in this case a

counterparty risk capital charge is calculated based on any potential exposure on a marked-to-market basis.

Market riskM k t i k i th i k th t i f fl t ti i l f i f t i i t t


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Pillar 3 2013

Operational riskOperational risk is the risk of loss or negative impact to the Group resulting from inadequate or failedinternal processes, people and systems, or from external factors such as regulation and key suppliers;

it includes legal and financial crime risks, but does not include strategic, reputation or business risks.

The Group and RIM have adopted the Basic Indicator Approach (BIA) under Pillar I which produces a

capital charge of 15% of its audited average net operating income for the three preceding financial years.

Analysis of operational risk capital requirement (000s):

Group RIM

Calculated under Basic Indicator Approach 19,365 16,525

Total operational risk capital requirement 19,365 16,525

Pillar IIThe Pillar II charge is agreed with the Regulator as part of their regular Supervisory Review and Evaluation

Process visit and covers additional risks not deemed to be included in either the Pillar I charge or the add-on.

Its basis of calculation is confidential.


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Pillar 3 2013

5. Credit riskOutstanding Settlement balances do not represent a credit risk to Rathbones under the principles of matched

principal broking and have therefore been excluded from any credit risk calculations.

Analysis of total exposures by exposure class (000s):

Month end average

over 2012

Group RIM Group RIM

Central government & central banks 116,041 116,041 83,919 83,919

Institutions 314,844 310,969 368,684 365,143

Corporates 2,821 - 3,221 -

Retail 84,501 84,659 74,355 73,195

Past due items 322 - 350 -

Short term claims on institutions 418,912 407,510 433,292 428,087

Collective investment undertakings 51,556 49,023 74,917 72,322

Other items (1) 51,889 39,539 46,332 37,580

Total exposures 1,040,886 1,007,741(1) Other items include tangible fixed assets, off-balance sheet guarantees, prepayments & accrued income and deferredtax assets.


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Pillar 3 2013

Analysis of movements in provision for impaired exposures (000s):

Group RIM

Balance at 1 January 110 -

Amounts written off (46) -

Amounts recovered - -

Charge for the year 41 -

Balance at 31 December 105 -

Reconciliation of IFRS7 and Pillar III credit risk exposures (000s):

Group RIM

IFRS7 credit risk exposures 1,012,573 985,864

Non-trading book exposures in equities 3,875 -

Undrawn loan facilities granted 15,934 15,934

Tangible fixed assets 11,950 11,945

Cash 3 2

Deferred tax asset 1,930 827

Other financial assets 8,382 1,371

O 578 578


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Pillar 3 2013

Analysis of the Groups total exposures by exposure class and geographical distribution (000s):

UK EurozoneRest ofWorld

31 December2012

Central government & central banks 116,041 - - 116,041

Institutions 148,871 100,781 65,192 314,844

Corporates - - 2,821 2,821

Retail 81,805 532 2,164 84,501

Past due items 322 - - 322


Collective investment undertakings 19,041 32,515 - 51,556

Other items (1) 50,692 650 547 51,889

Total exposures 620,545 279,224 141,117 1,040,886

Analysis of the Groups total exposures by exposure class and counterparty type (000s):

PublicSector

FinancialInstitutions

PrivateClients

31 December2012


Institutions - 314,844 - 314,844

Corporates - - 2,821 2,821

Retail - - 84,501 84,501

Past due items - - 322 322

S 418 912 418 912


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Pillar 3 2013

Analysis of RIMs total exposures by exposure class and geographical distribution (000s):

UK EurozoneRest ofWorld

31 December2012


Institutions 145,610 100,167 65,192 310,969

Corporates - - - -

Retail 82,045 532 2,082 84,659

Past due items - - - -


Collective investment undertakings 19,009 30,014 - 49,023

Other items (1) 38,858 650 31 39,539

Total exposures 590,300 276,109 141,332 1,007,741

Analysis of RIMs total exposures by exposure class and counterparty type (000s):

PublicSector

FinancialInstitutions

PrivateClients

31 December2012


Institutions - 310,969 - 310,969

Corporates - - - -

Retail - - 84,659 84,659


S 403 641 3 869 407 510


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Pillar 3 2013

6. Standardised approach to creditrisk

The Group and RIM have adopted the Standardised approach to credit risk, and it follows the standard

mapping of the 6 credit quality steps in a credit quality assessment scale as set out in Part 1 of Annex VI of

the Banking Consolidation Directive to ratings provided by Fitch, Moodys and Standard & Poors. These

standard mappings ensure that consistency between ratings provided by different External Credit AssessmentInstitutions (ECAIs) is achieved.

For the purpose of the credit risk calculation no mitigation has been taken on the value of any security held

against the loan book.

The Group has nominated the following ECAIs to rate exposures under the standardised approach to credit

risk:

ECAI Class

Fitch Ratings Limited

Central banks

Institutions

Corporates

Moodys Investor ServiceStandard & Poors

Collective Investment Undertakings

Analysis of the Groups total exposures by exposure class and credit quality step (000s):


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Pillar 3 2013

Analysis of RIMs total exposures by exposure class and credit quality step (000s):

Creditquality

step 1

Creditquality

step 2Unrated

31December

2012

Fitch Ratings Limited AAA to AA- A+ to A-

Moodys Investor Service Aaa to Aa3 A1 to A3

Standard & Poors AAAm to AA-m A+m to A-m


Institutions 20,152 290,817 - 310,969

Corporates - - - -

Retail (1) - - 84,659 84,659



Collective investment undertakings 49,023 - - 49,023

Other items (2) - - 39,539 39,539

Total exposures 344,965 534,709 128,067 1,007,741

(1)Retail exposures represent primarily loans advanced to existing RIM clients, whom as individuals are unrated.

(2) Other items include tangible fixed assets, off-balance sheet guarantees, prepayments & accrued income and deferred

tax assets.


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Pillar 3 2013

7. Interest rate risk in the bankingbook

Interest rate risk is the potential adverse impact on the Group's future cash flows and earnings from

changes in interest rates and arises from the mis-match in the maturity profile of the Group's interest

bearing assets and liabilities.

All interest-bearing assets and liabilities are placed into maturity buckets according to their contractual

maturity, in line with the FSA017 regulatory return, and the exposure for an unexpected 2% movement in

interest rates is calculated on a daily basis.

The average maturity mis-match is controlled by the Banking Committee. The overall risk exposure is

controlled by a combination of reducing mis-match and the occasional purchase of Forward Rate

Agreements (FRA) on a fully matched basis.

As the Group does not have any significant mis-match, the overall margin on liquid balances tends to bereasonably consistent in normal times and is a reflection of liquidity within client portfolios. In periods of

potential interest rate volatility the Banking Committee manages interest rate risk by shortening the maturity

of interest bearing assets.

From 23 October 2009 RIM published new client interest rate schedules which explicitly link the rate paidon client deposits to the UK base rate (in compliance with the Payment Services Directive). This means that

in the light of the current low UK base rate, a 2% downward shift has a significantly reduced effect than an

i l 2% d hif


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Pillar 3 2013

8. Non-trading book exposures inequities

The Group has two holdings of investments which are included within the category of exposures to

Institutions, namely London Stock Exchange Group Plc (LSE) and Euroclear. These are both historical

investments and are not generally traded.

Analysis of total non-trading book exposures in equities at 31 December 2012 (000s):

Group RIM

Listed 3,261 -

Unlisted 614 -

Total exposures 3,875 -

Listed investments are shown at fair value, being equal to the market value.

Unlisted investments are shown at fair value, being based on the net assets of the entity owned discounted for

liquidity.

Th li d i l di l f il bl f l i i d i 2012


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Pillar 3 2013

9. Remuneration codeThe Remuneration Policy of Rathbones is determined by the Boards Remuneration Committee which

comprises the non-executive directors of Rathbones. The policy provides a framework to attract, retain and

reward employees to achieve the strategic and business objectives of Rathbones within its risk appetite and

risk management framework.

Remuneration typically comprises a salary with benefits including pension scheme, life assurance, private

medical insurance and permanent health insurance together with a number of bonus or profit sharingarrangements. Salaries are set in the context of market data and the knowledge and skills required for the

particular role. The remuneration of senior management is reviewed annually by the Remuneration

Committee.

Executive directors of Rathbones are entitled to participate in a deferred profit sharing scheme and a long-

term incentive plan (LTIP), both of which have been designed to align the performance of the participants

with the medium to long term interests of the shareholders. Investment managers within Rathbones

participate in a profit sharing scheme which enables them to benefit from a proportion of the profit theygenerate individually for the business. They are also rewarded for attracting and retaining new funds under

management, such awards being subject to a deferral mechanism. Other employees within Rathbones are

eligible for discretionary bonus awards which are based on both financial and non-financial criteria.

The balance between fixed and variable remuneration both for Remuneration Code staff and for other

income-generating staff is focused on ensuring that there remains an appropriate link between overall

remuneration and performance. The Remuneration Committee of Rathbones is advised by Deloitte,

idi l k d d d i b i i li i d


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Pillar 3 2013

10. DisclosureThis document includes the disclosure requirements that are required by the Capital Requirements

Directive and the Regulator.

Rathbone Brothers Plc is subject to consolidated supervision by the Regulator. The Groups principal

operating subsidiaries are detailed more fully in Section 1. All subsidiaries are limited by ordinary shares,

and other than the requirements to hold regulatory capital there are no practical or legal impediments to theprompt transfer of capital between Rathbone Brothers Plc and its subsidiaries.

FrequencyPillar III disclosure is made on an annual basis.

LocationThe report is published in the Investor Relations section of the Rathbones website, and can also be available

on request by writing to the Finance Director, Rathbone Brothers Plc, 1 Curzon Street, London W1J 5FB.

VerificationDisclosures are unaudited but have been verified internally. They will only be subject to external verification

h h i l h d i bli h d fi i l i f i d i d


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Pillar 3 2013

Page 24

Appendix 1: Group reconciliation of report &

accounts to Pillar III credit risk exposuresReconciliation of report & accounts to Pillar III credit risk exposures (000s) Analysis of credit risk exposure by risk weighting (000s)

PresentedBalance

Sheet

Excludedfrom

creditrisk

Excludedfrom scope

Other

Pillar IIIcredit

riskexposures

0% 20% 50% 75% 100% 150% Total

Cash and balances at centralbanks

116,003 - - 116,003 116,003 - - - - - 116,003

Settlement balances 12,606 (12,606) - -

Loans and advances to banks 169,795 - (1,766) 168,029 - 113,029 55,000 - - - 168,029

Loans and advances to customers 71,711 - - 15,934 87,645 15,934 - - 45,856 25,533 322 87,645Investment securities

- Available for sale 55,749 (374) - 55,375 - 51,500 - - 3,875 - 55,375

- Held to maturity 559,025 - - - 559,025 - 209,025 350,000 - - - 559,025

Investment in associate 1,237 (1,237) - - - - - - - - - -

Intangible assets 97,423 (97,423) - - - - - - - - - -

Property, plant and equipment 11,950 - - - 11,950 - - - - 11,950 - 11,950

Deferred tax asset 1,930 - - - 1,930 - - - - 1,930 - 1,930

Prepayments, accrued income andother assets

40,279 - (22) - 40,257 42 1,529 1,228 - 37,458 - 40,257

Intra-group balances - - 94 - 94 - - - - 94 - 94

Off-Balance Sheet guarantees - - - 578 578 - - - - 578 - 578

Total assets 1,137,708 (111,266) (2,068) 16,512 1,040,886 131,979 375,083 406,228 45,856 81,418 322 1,040,886

Total risk-weighted assets - 75,017 203,114 34,392 81,418 483 394,424

Total credit risk capital requirement (at 8%) - 6,001 16,249 2,752 6,513 39 31,554


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Pillar 3 2013

Page 25

Appendix 2: Group Common Equity Tier 1 ratio

Calculation of Group Common Equity Tier 1 ratio as at 31 December 2012 (000s):

2012

Basel IIBasel III

adjustmentsBasel III

Total tier 1 after deductions 116,441 12,259 128,700

Risk Weighted assets (Credit risk)(1) 394,424Risk Weighted assets (Market risk)(2) 1,825Risk Weighted assets (Operational risk) (3) 242,063

Total risk exposure amount 638,312

Common equity Tier 1 ratio 20.2%

(1) See Appendix 1(2) Calculated as 12.5 times the foreign exchange position risk requirement(3) Calculated as 12.5 times the operational risk capital requirement


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Pillar 3 2013

Page 26

Appendix 3: RIM reconciliation of report &

accounts to Pillar III credit risk exposuresReconciliation of RIM report & accounts to Pillar III credit risk exposures (000s) Analysis of credit risk exposure by risk weighting (000s)

PresentedBalance

Sheet

Excludedfrom

creditrisk

Excludedfrom scope

Other

Pillar IIIcredit

riskexposures

0% 20% 50% 75% 100% 150% Total

Cash and balances at centralbanks

116,002 - - - 116,002 116,002 - - - - - 116,002

Settlement balances 8,780 (8,780) - - - - - - - - - -

Loans and advances to banks 152,852 - - - 152,852 - 97,852 55,000 - - - 152,852

Loans and advances to customers 72,593 - - 15,934 88,527 16,078 - - 45,687 26,762 - 88,527Investment securities

- Available for sale 49,000 - - - 49,000 - 49,000 - - - - 49,000

- Held to maturity 559,025 - - - 559,025 - 209,025 350,000 - - - 559,025

Intangible assets 63,034 (63,034) - - - - - - - - - -

Property, plant and equipment 11,945 - - - 11,945 - - - - 11,945 - 11,945

Deferred tax asset 827 - - - 827 - - - - 827 - 827

Prepayments, accrued income andother assets

28,985 - - - 28,985 41 1,529 1,228 - 26,187 - 28,985

Investment in subsidiaryundertakings

2,934 (2,934) - - - - - - - - - -

Off-Balance Sheet guarantees - - - 578 578 - - - - 578 - 578Total assets 1,065,977 (74,748) - 16,512 1,007,741 132,121 357,406 406,228 45,687 66,299 - 1,007,741

Total risk-weighted assets - 71,481 203,114 34,265 66,299 - 375,159

Total credit risk capital requirement (at 8%) - 5,719 16,249 2,741 5,304 - 30,013


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Pillar 3 2013

Page 27

Appendix 4: RIM Common Equity Tier 1 ratio

Calculation of RIM Common Equity Tier 1 ratio as at 31 December 2012 (000s):

2012

Basel IIBasel III

adjustmentsBasel III

Total tier 1 after deductions 67,215 (1,468) 65,747

Risk Weighted assets (Credit risk)(1) 375,159Risk Weighted assets (Market risk)(2) 1,063Risk Weighted assets (Operational risk) (3) 206,563

Total risk exposure amount 582,785

Common equity Tier 1 ratio 11.3%

(4) See Appendix 1(5) Calculated as 12.5 times the foreign exchange position risk requirement(6) Calculated as 12.5 times the operational risk capital requirement

rathbone pillar 3 2013 - final

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