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Unchanged ECB capital requirements for Crédit Agricole Group and Crédit Agricole S.A.
Crédit Agricole Group and Crédit Agricole S.A. have been recently notified by the European Central Bank (ECB) of the new minimum capital requirements following the results of the Supervisory Review and Evaluation Process (SREP), confirming the current level of pillar 2 requirements.
Since the opinion of the European Banking Authority (EBA) on Friday 18 December 2015, both Pillar 1 and Pillar 2 capital requirements must be fulfilled before common equity tier 1 capital (CET1) is allocated to meet combined buffer requirements.
As a result, distributions on shares and additional Tier 1 hybrid instruments and payment of variable compensation to identified staff by institutions that fail to meet the Pillar 2 minimal capital requirements (including any systemic surcharge) will be restricted or prohibited, as the case may be. The EBA also recommended that Pillar 2 capital requirements be made public.
Crédit Agricole Group will need to meet a minimum consolidated CET1 ratio (including the Pillar 1, Pillar 2 and conservation buffer requirements) of at least 7.875%, phased in, as of 1 January 2018. In addition, the G-SIB buffer required by the Financial Stability Board to be applied on top of these requirements will result in a 0.75% surcharge on a transitional basis from 1 January 2018 (bringing the minimum capital requirement at this date to 8.625%) and is expected to reach 1% on a fully loaded basis in 2019.
In this context, Crédit Agricole Group demonstrates a best-in-class solvency level among European banking peers with a consolidated CET1 capital ratio as at 30 September 2017 standing at 14.9% calculated by applying CRD IV transitional arrangements for 2017, that is a 627 basis points buffer above the 8.625% minimum level applicable as at 1 January 2018. On a fully loaded basis the consolidated CET1 capital ratio as at 30 September 2017 standing at 14.9% as well result in a 540 basis points buffer above the level applicable in 2019.
Crédit Agricole S.A. will need to meet a minimum consolidated CET1 ratio (including the Pillar 1, Pillar 2 and conservation buffer requirements) of 7.875%, phased in, as of 1 January 2018.
No additional capital buffer applies to Crédit Agricole S.A.. Crédit Agricole S.A., as the central body of Crédit Agricole Group, fully benefits from the solidarity mechanism as well as internal flexibility on capital circulation within the very strongly capitalised Crédit Agricole Group.
Crédit Agricole S.A.’s aim is to operate with solid cushions above the minimum consolidated ECB requirements that will be applicable from 1 January 2018. Crédit Agricole S.A.’s consolidated CET1 capital ratio as at 30 September 2017 was 12.0% calculated by applying CRD IV transitional arrangements for 2017, which makes it already perfectly compliant with these requirements. Crédit Agricole S.A.’s target is to have a consolidated CET1 ratio of approximately 11%, on a fully loaded basis, which translated into 250 basis points above the 8.5% fully loaded minimum ECB requirement.