Capital Adequacy Ratios for Banks

Capital adequacy ratios for banks

Capital adequacy ratios are a measure of the amount of a bank's capital expressed as a percentage of

its risk weighted credit exposures.

An international standard which recommends minimum capital adequacy ratios has been developed to

ensure banks can absorb a reasonable level of losses before becoming insolvent.

Applying minimum capital adequacy ratios serves to protect depositors and promote the stability and

efficiency of the financial system.

Two types of capital are measured - tier one capital which can absorb losses without a bank being

required to cease trading, e.g. ordinary share capital, and tier two capital which can absorb losses in

the event of a winding-up and so provides a lesser degree of protection to depositors, e.g.

subordinated debt.

Measuring credit exposures requires adjustments to be made to the amount of assets shown on a

bank's balance sheet. The loans a bank has made are weighted, in a broad brush manner, according to

their degree of riskiness, e.g. loans to Governments are given a 0 percent weighting whereas loans to

individuals are weighted at 100 percent.

Off-balance sheet contracts, such as guarantees and foreign exchange contracts, also carry credit risks.

These exposures are converted to credit equivalent amounts which are also weighted in the same way

as on-balance sheet credit exposures. On-balance sheet and off balance sheet credit exposures are

added to get total risk weighted credit exposures.

The minimum capital adequacy ratios that apply are:

_ tier one capital to total risk weighted credit exposures to be not less than 4 percent;

_ total capital (tier one plus tier two less certain deductions) to total risk weighted credit exposures to

be not less than 8 percent.

Capital adequacy ratio (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR)[1], is a

ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb

a reasonable amount of loss and complies with statutory Capital requirements.

Formula

Capital adequacy ratios ("CAR") are a measure of the amount of a bank's core capital expressed as

a percentage of its assets weighted creditexposures.

Capital adequacy ratio is defined as

1 | Capital Adequacy Ratio

http://en.wikipedia.org/wiki/Credit_(finance)

http://en.wikipedia.org/wiki/Assets

http://en.wikipedia.org/wiki/Percentage

http://en.wikipedia.org/wiki/Tier_1_capital

TIER 1 CAPITAL -A)Equity Capital, B) Disclosed Reserves

TIER 2 CAPITAL -A)Undisclosed Reserves, B)General Loss reserves, C)Subordinate Term Debts

where Risk can either be weighted assets ( ) or the respective national regulator's minimum

total capital requirement. If using risk weightedassets,

≥ 10%.

The percent threshold varies from bank to bank (10% in this case, a common requirement for

regulators conforming to the Basel Accords) is set by the national banking regulator of different

countries.

Two types of capital are measured: tier one capital (T1 above), which can absorb losses without

a bank being required to cease trading, and tier two capital (T2 above), which can absorb losses in the

event of a winding-up and so provides a lesser degree of protection to depositors.

Use

Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and

other risks such as credit risk, operational risk, etc. In the most simple formulation, a bank's capital is

the "cushion" for potential losses, and protects the bank's depositors and other lenders. Banking

regulators in most countries define and monitor CAR to protect depositors, thereby maintaining

confidence in the banking system.[1]

CAR is similar to leverage; in the most basic formulation, it is comparable to the inverse of debt-to-

equity leverage formulations (although CAR uses equity over assets instead of debt-to-equity;

since assets are by definition equal to debt plus equity, a transformation is required). Unlike

traditional leverage, however, CAR recognizes that assets can have different levels of risk.

Development of Minimum Capital Adequacy Ratios

The "Basle Committee" ( centred in the Bank for International Settlements), which was originally

established in 1974, is a committee that represents central banks and financial supervisory authorities

of the major industrialized countries (the G10 countries). The committee concerns itself with ensuring

the effective supervision of banks on a global basis by setting and promoting international standards.


http://en.wikipedia.org/wiki/Risk


http://en.wikipedia.org/wiki/Leverage_(finance)

http://en.wikipedia.org/wiki/Debt

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http://en.wikipedia.org/wiki/Ownership_equity


http://en.wikipedia.org/wiki/Inverse

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http://en.wikipedia.org/wiki/Bank_regulation


http://en.wikipedia.org/wiki/Credit_(finance)


http://en.wikipedia.org/wiki/Bank


http://en.wikipedia.org/wiki/Basel_Accords


http://en.wikipedia.org/wiki/Financial_capital



http://en.wikipedia.org/wiki/Risk

Its principal interest has been in the area of capital adequacy ratios. In 1988 the committee issued a

statement of principles dealing with capital adequacy ratios. This statement is known as the "Basle

Capital Accord". It contains a recommended approach for calculating capital adequacy ratios and

recommended minimum capital adequacy ratios for international banks. The Accord was developed in

order to improve capital adequacy ratios (which were considered to be too low in some banks) and to

help standardise international regulatory practice. Tier one capital is capital which is permanently and

freely available to absorb losses without the bank being obliged to cease trading. An example of tier

one capital is the ordinary share capital of the bank. Tier one capital is important because it safeguards

both the survival of the bank and the stability of the financial system.

Tier two capital is capital which generally absorbs losses only in the event of a winding-up of a bank,

and so provides a lower level of protection for depositors and other creditors. It comes into play in

absorbing losses after tier one capital has been lost by the bank. Tier two capital is sub-divided into

upper and lower tier two capital. Upper tier two capital has no fixed maturity, while lower tier two

capital has a limited life span, which makes it less effective in providing a buffer against losses by the

bank. An example of tier two capital is subordinated debt. This is debt which ranks in priority behind

all creditors except shareholders. In the event of a winding-up, subordinated debt holders will only be

repaid if all other creditors (including depositors) have already been repaid.

The Basle Capital Accord also defines a third type of capital, referred to as tier three capital. Tier

three capital consists of short term subordinated debt. It can be used to provide a buffer against losses

caused by market risks if tier one and tier two capital are insufficient for this. Market risks are risks of

losses on foreign exchange and interest rate contracts caused by changes in foreign exchange rates and

interest rates. The Reserve Bank does not require capital to be held against market risk, so does not

have any requirements for the holding of tier three capital.

Credit Exposures

Credit exposures arise when a bank lends money to a customer, or buys a financial asset (e.g. a

commercial bill issued by a company or another bank), or has any other arrangement with another

party that requires that party to pay money to the bank (e.g. under a foreign exchange contract). A

credit risk is a risk that the bank will not be able to recover the money it is owed.

The risks inherent in a credit exposure are affected by the financial strength of the party owing money

to the bank. The greater this is, the more likely it is that the debt will be paid or that the bank can, if

necessary, enforce repayment. Credit risk is also affected by market factors that impact on the value

or cash flow of assets that are used as security for loans. For example, if a bank has made a loan to a

person to buy a house, and taken a mortgage on the house as security, movements in the property

market have an influence on the likelihood of the bank recovering all money owed to it. Even for


unsecured loans or contracts, market factors which affect the debtor's ability to pay the bank can

impact on credit risk.

The calculation of credit exposures recognizes and adjusts for two factors:

On-balance sheet credit exposures differ in their degree of riskiness (e.g. Government Stock compared

to personal loans). Capital adequacy ratio calculations recognize these differences by requiring more

capital to be held against more risky exposures. This is done by weighting credit exposures according

to their degree of riskiness. A broad brush approach is taken to defining degrees of riskiness. The type

of debtor and the type of credit exposures serve as proxies for degree of riskiness (e.g. Governments

are assumed to be more creditworthy than individuals, and residential mortgages are assumed to be

less risky than loans to companies).

The Reserve Bank defines seven credit exposure categories into which credit exposures must

beassigned for capital adequacy ratio calculation purposes.

Off-balance sheet contracts (e.g. guarantees, foreign exchange and interest rate contracts) also carry

credit risks. As the amount at risk is not always equal to the nominal principal amount of the contract,

off-balance sheet credit exposures are first converted to a "credit equivalent amount". This is done by

multiplying the nominal principal amount by a factor which recognises the amount of risk inherent in

particular types of off-balance sheet credit exposures. After deriving credit equivalent amounts for

off-balance sheet credit exposures, these are weighted according to the riskiness of the counterparty,

in the same way as on-balance sheet credit exposures. Nine credit exposure categories are defined to

cover all types of off-balance sheet credit exposures.

The credit exposure categories and the risk weighting process are illustrated by the second step of the

calculation example.

Minimum Capital Adequacy Ratios

The Basle Capital Accord sets minimum capital adequacy ratios that supervisory authorities are

encouraged to apply. These are: tier one capital to total risk weighted credit exposures to be not less

than 4 percent; total capital (i.e. tier one plus tier two less certain deductions) to total risk weighted

credit exposures to be not less than 8 percent;

There are some further standards applicable to tier two capital: tier two capital may not exceed 100

percent of tier one capital; lower tier two capital may not exceed 50 percent of tier one capital; lower

tier two capital is amortized on a straight line basis over the last five years of its life.

The Reserve Bank will not register banks in New Zealand that do not meet these standards - and

maintaining the minimum standards is always made a condition of registration.


If the registered bank is incorporated in New Zealand, then the minimum standards apply to the

financial reporting group of the bank. If the registered bank is a branch of an overseas bank, then it is

the capital adequacy ratios of the whole overseas bank (and not the branch) which are relevant.

Overseas banks which operate as branches are registered in New Zealand on the condition that they

comply with the capital adequacy ratio requirements imposed by the financial authorities in their

home country and that these requirements are no less than those recommended by the Basle Capital

Accord.

When a registered bank falls below the minimum requirements it must present a plan to the Reserve

Bank (which is publicly disclosed) aimed at restoring capital adequacy ratios to at least the minimum

level required. Even though a bank may have capital adequacy ratios above the minimum levels

recommended by the Basle Capital Accord, this is no guarantee that the bank is "safe". Capital

adequacy ratios are concerned primarily with credit risks. There are also other types of risks which are

not recognized by capital adequacy ratios e.g.. inadequate internal control systems could lead to large

losses by fraud, or losses could be made on the trading of foreign exchange and other types of

financial instruments. Also capital adequacy ratios are only as good as the information on which they

are based, e.g. if inadequate provisions have been made against problem loans, then the capital

adequacy ratios will overstate the amount of losses that the bank is able to absorb. Capital adequacy

ratios should not be interpreted as the only indicators necessary to judge a bank's financial soundness.

Calculation Example

Because off-balance sheet credit exposures are included in calculations, capital adequacy ratios cannot

be calculated by reference to the balance sheet alone. Even the calculation of capital adequacy ratios

to cover on-balance sheet credit exposures usually cannot be done by using published balance sheets,

as these will probably not provide sufficient detail about who the bank has lent to, or the issuers of

securities held by the bank. However, the disclosure statements of the bank should contain the

information necessary to confirm the bank's capital adequacy ratio calculations.

To illustrate the process a bank goes through in calculating its capital adequacy ratios, a simple

worked example is contained in Figures 1 to 5. The steps in the calculation are explained below. The

balance sheet information and the off-balance sheet credit exposures on which the calculations are

based are set out in Figures 1 and 2.


First Step - Calculation of Capital

The composition of the categories of capital is as follows:

Tier One Capital

In general, this comprises:

_ the ordinary share capital (or equity) of the bank; and

_ audited revenue reserves e.g.. retained earnings; less

_ current year's losses;

_ future tax benefits; and

_ intangible assets, e.g. goodwill.

Upper Tier Two Capital



_ unaudited retained earnings;

_ revaluation reserves;

_ general provisions for bad debts;

_ perpetual cumulative preference shares (i.e. preference shares with no maturity date whose

dividends accrue for future payment even if the bank's financial condition does not support immediate

payment);

_ perpetual subordinated debt (i.e. debt with no maturity date which ranks in priority behind all

creditors except shareholders).

Lower Tier Two Capital


_ subordinated debt with a term of at least 5 years;

_ redeemable preference shares which may not be redeemed for at least 5 years.

Total Capital

This is the sum of tier 1 and tier 2 capital less the following deductions:

_ equity investments in subsidiaries;

_ shareholdings in other banks that exceed 10 percent of that bank's capital;

_ unrealised revaluation losses on securities holdings.

Figure 3 shows an example of a calculation of capital.


Second Step - Calculation of Credit Exposures

On-Balance Sheet Exposures

The categories into which all credit exposures are assigned for capital adequacy ratiopurposes, and the

percentages the balance sheet numbers are weighted by, are as follows:

Credit Exposure Type Percentage Risk Weighting

Cash 0

Short term claims on governments 0

Long term claims on governments (> 1 year) 10

Claims on banks 20

Claims on public sector entities 20

Residential mortgages 50

All other credit exposures 100

Off-Balance Sheet Credit Exposures

(1) Calculation of Credit Equivalents

Listed below are the categories of credit exposures, and their associated "credit conversion factor".

The nominal principal amounts in each category are multiplied by the credit conversion factor to get a

"credit equivalent amount":


Credit Exposure Type Credit Conversion

Factor (%)

Direct credit substitutes 100

e.g. guarantees, bills of exchange, letters of credit, risk participations

Asset sales with recourse 100

Commitments with certain drawdown 100

e.g. forward purchases, partly paid shares

Transaction related contracts 50

e.g. performance bonds, bid bonds

Underwriting and sub-underwriting facilities 50

Other commitments with an original maturity more than 1 year 50

Short term trade related contingencies e.g. letters of credit 20

Other commitments with an original maturity of less than 1 year or which can be 0

unconditionally cancelled at any time

The final category of off-balance sheet credit exposures, market related contracts (i.e. interest rate and

foreign exchange rate contracts), is treated differently from the other categories. Credit equivalent

amounts are calculated by adding the following:

(a) current exposure - this is the market value of a contract i.e.. the amount the bank could get by

selling its rights under the contract to another party (counted as zero for contracts with a negative

value); and

(b) potential exposure i.e.. an allowance for further changes in the market value, which is calculated

as a percentage of the nominal principal amount as follows:

Interest rate contracts < 1 year 0%

Interest rate contracts > 1 year 0.5%

Exchange rate contracts < 1 year 1%


Exchange rate contracts > 1 year 5%

Although the nominal principal amount of market related contracts may be large, the credit equivalent

amounts are usually small, and so may add very little to the amount of credit exposures to be risk

weighted.

(2) Calculation of Risk Weighted Credit Exposures

The credit equivalent amounts of all off-balance sheet exposures are multiplied by the same risk

weightings that apply to on-balance sheet exposures (i.e. the weighting used depends on the type of

counterparty), except that market related contracts that would otherwise be weighted at 100 percent

are weighted at 50 percent.

Figure 4 shows an example of a calculation of risk weighted assets.

Third Step - Calculation of Capital Adequacy Ratios

Capital adequacy ratios are calculated by dividing tier one capital and total capital by risk weighted

credit exposures.

Figure 5 shows an example of a calculation of capital adequacy ratios


BANK OF AMERICA

Bank of America is one of the world's largest financial institutions, serving individual consumers,

small-and middle-market businesses and large corporations with a full range of banking, investing,

asset management and other financial and risk management products and services. The company

provides unmatched convenience in the United States, serving approximately 58 million consumer

and small business relationships with approximately 5,700 retail banking offices and approximately

17,800 ATMs and award-winning online banking with 30 million active users. Bank of America is

among the world's leading wealth management companies and is a global leader in corporate and

investment banking and trading across a broad range of asset classes, serving corporations,

governments, institutions and individuals around the world. Bank of America offers industry-leading

support to approximately 4 million small business owners through a suite of innovative, easy-to-use

online products and services. The company serves clients through operations in more than 40

countries. Bank of America Corporation stock (NYSE: BAC) is a component of the Dow Jones

Industrial Average and is listed on the New York Stock Exchange.

Purpose

The purpose is to make opportunity possible for our customers and clients at every stage of their

financial lives.

Vision

The vision is to be the finest financial services company in the world. This means:

For Customers: We will provide clarity, choice, control, and the best products, advice and

service for customers’ and clients’ financial needs. Key metrics include satisfaction scores, brand

health, wallet share and growth in number of customers and clients.

For Associates: We will create a workplace in which associates have the opportunity to

achieve their full potential; in which diversity and inclusion are valued and fostered; in which

associates can succeed while balancing work, life and family; and in which rewards are based on

results. Key metrics include satisfaction survey scores, diversity and inclusion index and

attrition/retention.

For Shareholders: We will produce long-term, consistent returns by deepening

customer/client relationships, managing the balance sheet wisely and managing risk well. Key metrics

include operating returns, growth in tangible book value and total shareholder return.

For Communities: We will work to strengthen the communities we serve. Key metrics

include goals for community development lending and investing ($1.5 trillion/10 years), philanthropy


($2 billion/10 years), environmental initiatives ($20 billion/10 years) and volunteerism (1.5 million

hour challenge).

Strategy

Even though we have a large, sophisticated, global company, our strategy is straight forward:

•Serve three groups of customers –individuals, companies and institutional investors

•Deliver all our capabilities in the U.S.; deliver GWIM, GCIB, GBAM capabilities globally

•Deliver capabilities on an integrated basis to meet the needs of customers and clients

•Create long-term relationships and a value exchange for what we provide

Operating Principles

•Be customer-driven

•Maintain a fortress balance sheet

•Pursue operational excellence, especially in regard to risk management and efficiency

•Deliver on shareholder return model

•Clean up legacy issues

•Be the best place for people to work

Liquidity Risk and Capital Management

Liquidity Risk

Liquidity is the ongoing ability to accommodate liability maturities and deposit withdrawals, fund

asset growth and business operations, and meet contractual obligations through unconstrained access

to funding at reasonable market rates. Liquidity management involves forecasting funding

requirements and maintaining sufficient capacity to meet the needs and accommodate fluctuations in

asset and liability levels due to changes in our business operations or unanticipated events. Sources of

liquidity include deposits and other customer-based funding, wholesale market-based funding, and

liquidity provided by the sale or securitization of assets.


We manage liquidity at two levels. The first is the liquidity of the parent company, which is the

holding company that owns the banking and nonbanking subsidiaries. The second is the liquidity of

the banking subsidiaries. The management of liquidity at both levels is essential because the parent

company and banking subsidiaries each have different funding needs and sources, and each are

subject to certain regulatory guidelines and requirements. Through ALCO, the Finance Committee is

responsible for establishing our liquidity policy as well as approving operating and contingency

procedures, and monitoring liquidity on an ongoing basis. Corporate Treasury is responsible for

planning and executing our funding activities and strategy.

In order to ensure adequate liquidity through the full range of potential operating environments and

market conditions, we conduct our liquidity management and business activities in a manner that will

preserve and enhance funding stability, flexibility, and diversity. Key components of this operating

strategy include a strong focus on customer-based funding, maintaining direct relationships with

wholesale market funding providers, and maintaining the ability to liquefy certain assets when, and if,

requirements warrant.

We develop and maintain contingency funding plans for both the parent company and bank liquidity

positions. These plans evaluate our liquidity position under various operating circumstances and allow

us to ensure that we would be able to operate though a period of stress when access to normal sources

of funding is constrained. The plans project funding requirements during a potential period of stress,

specify and quantify sources of liquidity, outline actions and procedures for effectively managing

through the problem period, and define roles and responsibilities. They are reviewed and approved

annually by ALCO.

Our borrowing costs and ability to raise funds are directly impacted by our credit ratings. The credit

ratings of Bank of America Corporation and Bank of America, National Association (Bank of

America, N.A.) are reflected in the table below.

Table 7

Credit Ratings


December 31, 2005

Bank of America Corporation Bank of America, N.A.

SeniorDebt

SubordinatedDebt

CommercialPaper

Short-termBorrowings

Long-termDebt

Moody’s Aa2 Aa3 P-1 P-1 Aa1

Standard & Poor’s AA- A+ A-1+ A-1+ AA

Fitch, Inc. AA- A+ F1+ F1+ AA-

Under normal business conditions, primary sources of funding for the parent company include

dividends received from its banking and nonbanking subsidiaries, and proceeds from the issuance of

senior and subordinated debt, as well as commercial paper and equity. Primary uses of funds for the

parent company include repayment of maturing debt and commercial paper, share repurchases,

dividends paid to shareholders, and subsidiary funding through capital or debt.

The parent company maintains a cushion of excess liquidity that would be sufficient to fully fund

holding company and nonbank affiliate operations for an extended period during which funding from

normal sources is disrupted. The primary measure used to assess the parent company’s liquidity is the

“Time to Required Funding” during such a period of liquidity disruption. This measure assumes that

the parent company is unable to generate funds from debt or equity issuance, receives no dividend

income from subsidiaries, and no longer pays dividends to shareholders while continuing to meet

nondiscretionary uses needed to maintain bank operations and repayment of contractual principal and

interest payments owed by the parent company and affiliated companies. Under this scenario, the

amount of time the parent company and its nonbank subsidiaries can operate and meet all obligations

before the current liquid assets are exhausted is considered the “Time to Required Funding”. ALCO

approves the target range set for this metric, in months, and monitors adherence to the target.

Maintaining excess parent company cash that ensures that “Time to Required Funding” remains in the

target range is the primary driver of the timing and amount of the Corporation’s debt issuances. As of

December 31, 2005 “Time to Required Funding” was 29 months.


The primary sources of funding for our banking subsidiaries include customer deposits, wholesale

market–based funding, and asset securitizations. Primary uses of funds for the banking subsidiaries

include growth in the core asset portfolios, including loan demand, and in the ALM portfolio. We use

the ALM portfolio primarily to manage interest rate risk and liquidity risk.

The strength of our balance sheet is a result of rigorous financial and risk discipline. Our excess

deposits, which are a low cost of funding source, fund the purchase of additional securities and result

in a lower loan to deposit ratio. Mortgage-backed securities and mortgage loans have prepayment risk

which has to be actively managed. Repricing of deposits is a key variable in this process. The capital

generated in excess of capital adequacy targets and to support business growth, is available for the

payment of dividends and share repurchases.

ALCO determines prudent parameters for wholesale market-based borrowing and regularly reviews

the funding plan for the bank subsidiaries to ensure compliance with these parameters. The

contingency funding plan for the banking subsidiaries evaluates liquidity over a 12-month period in a

variety of business environment scenarios assuming different levels of earnings performance and

credit ratings as well as public and investor relations factors. Funding exposure related to our role as

liquidity provider to certain off-balance sheet financing entities is also measured under a stress

scenario. In this analysis, ratings are downgraded such that the off-balance sheet financing entities are

not able to issue commercial paper and backup facilities that we provide are drawn upon. In addition,

potential draws on credit facilities to issuers with ratings below a certain level are analyzed to assess

potential funding exposure.

One ratio used to monitor the stability of our funding composition is the “loan to domestic deposit”

(LTD) ratio. This ratio reflects the percent of Loans and Leases that are funded by domestic customer

deposits, a relatively stable funding source. A ratio below 100 percent indicates that our loan portfolio

is completely funded by domestic customer deposits. The ratio was 102 percent at December 31, 2005

compared to 93 percent at December 31, 2004. The increase was primarily attributable to organic

growth in the loan and lease portfolio.

We originate loans for retention on our balance sheet and for distribution. As part of our “originate to

distribute” strategy, commercial loan originations are distributed through syndication structures, and

residential mortgages originated by Consumer Real Estate are frequently distributed in the secondary

market. In connection with our balance sheet management activities, we may retain mortgage loans

originated as well as purchase and sell loans based on our assessment of market conditions.


Regulatory Capital

As a regulated financial services company, we are governed by certain regulatory capital

requirements. Presented in Note 15 of the Consolidated Financial Statements are the regulatory capital

ratios, actual capital amounts and minimum required capital amounts for the Corporation, Bank of

America, N.A., Fleet National Bank and Bank of America, N.A. (USA) at December 31, 2005 and

2004. On June 13, 2005, Fleet National Bank merged with and into Bank of America, N.A., with

Bank of America, N.A. as the surviving entity. As of December 31, 2005, the entities were classified

as “well-capitalized” for regulatory purposes, the highest classification.

Certain corporate sponsored trust companies which issue trust preferred securities (Trust Securities)

are deconsolidated under FIN 46R. As a result, the Trust Securities are not included on our

Consolidated Balance Sheets. On March 1, 2005, the FRB issued Risk-Based Capital Standards: Trust

Preferred Securities and the Definition of Capital (the Final Rule) which allows Trust Securities to

continue to qualify as Tier 1 Capital with revised quantitative limits that would be effective after a

five-year transition period. As a result, we continue to include Trust Securities in Tier 1 Capital.

The FRB’s Final Rule limits restricted core capital elements to 15 percent for internationally active

bank holding companies. In addition, the FRB revised the qualitative standards for capital instruments

included in regulatory capital. Internationally active bank holding companies are those with

consolidated assets greater than $250 billion or on-balance sheet exposure greater than $10 billion. At

December 31, 2005, our restricted core capital elements comprised 16.6 percent of total core capital

elements. We expect to be fully compliant with the revised limits prior to the implementation date of

March 31, 2009.

Basel II

In June 2004, Basel II was published with the intent of more closely aligning regulatory capital

requirements with underlying risks. Similar to economic capital measures, Basel II seeks to address

credit risk, market risk and operational risk.

While economic capital is measured to cover unexpected losses, we also maintain a certain threshold

in terms of regulatory capital to adhere to legal standards of capital adequacy. With recent updates to

the U.S. implementation, these thresholds or leverage ratios, will continue to be utilized for the

foreseeable future. Maintaining capital adequacy with our regulatory capital under Basel II, does not

impact internal profitability or pricing.

In the U.S., Basel II will not be implemented until January 1, 2008, which will serve as our parallel

test year, followed by full implementation in 2009. The impact on our capital management processes


http://www.bankofamerica.com/annualreport/2005/financial_review/54_note15.cfm

and capital requirements continues to be evaluated. As Basel II is an international regulation, U.S.

regulatory agencies are drafting a U.S. oriented measure which follows the Basel II construct.

Recently, an assessment of the potential effect on regulatory capital known as Quantitative Impact

Study 4 was completed, which generated disparate results among participants. In order to address the

potential changes in capital levels, regulators have established floors or limits as to how much capital

can decrease from period to period after full implementation through at least 2011. We are committed

to working with the regulators and continue to proactively monitor their efforts towards achieving a

successful implementation of Basel II.

Implementation of Basel II requires a significant enterprise-wide effort. During 2005, our dedicated

Basel II Program Management Office, supported by a number of business segment specialists and

technologists, completed major planning activities required to achieve Basel II preparedness. During

2006, we are aggressively moving forward with policy, process and technology changes required to

achieve full compliance by the start of parallel processing in 2008. We continue to work closely with

the regulatory agencies in this process.

Dividends

Effective for the third quarter 2005 dividend, the Board increased the quarterly cash dividend 11

percent from $0.45 to $0.50 per common share. In October 2005, the Board declared a fourth quarter

cash dividend which was paid on December 23, 2005 to common shareholders of record on

December 2, 2005. In January 2006, the Board declared a quarterly cash dividend of $0.50 per

common share payable on March 24, 2006 to shareholders of record on March 3, 2006.

Share Repurchases

We will continue to repurchase shares, from time to time, in the open market or in private transactions

through our approved repurchase programs. We repurchased 126.4 million shares of common stock in

2005, which more than offset the 79.6 million shares issued under our company’s employee stock

plans. During 2006 we expect to use available excess capital to repurchase shares in excess of shares

issued under our employee stock plans. For additional information on common share repurchases,

see Note 14 of the Consolidated Financial Statements.

(Source: Bank of America’s annual report in 2005)


http://www.bankofamerica.com/annualreport/2005/financial_review/53_note14.cfm

Capital Levels

Regulatory Overview

Regulatory Capital Changes

•The regulatory capital rules as written by the Basel Committee on Banking Supervision (the Basel

Committee) continue to evolve. We manage regulatory capital to adhere to regulatory standards of

capital adequacy based on our current understanding of the rules and the application of such rules to

our business as currently conducted.

•U.S. banking regulators published a final Basel II rule (Basel II rules) in December 2007, which

requires us to implement Basel II at the holding company level as well as at certain U.S. bank

subsidiaries. We are currently in the Basel II qualification period and expect to be in compliance with

all relevant Basel II requirements within the regulatory timelines.

•On December 16, 2010, U.S. regulators issued a Notice of Proposed Rulemaking on the Risk-based

Capital Guidelines for Market Risk (the Market Risk Rules) reflecting partial adoption of the Basel

Committee’s July 2009 consultative document on the topic. We anticipate that these rules will become

effective in early 2012 and expect to be in full compliance with these standards within the regulatory

timelines.

•In addition to the Basel II rules, the Basel Committee issued “Basel III: A global regulatory

framework for more resilient banks and banking systems,” together with the liquidity standards

discussed below (Basel III) in December 2010. We expect to be in full compliance with the Basel III

capital standards within the regulatory timelines, including when fully effective on January 1, 2019.


We will continue to monitor our capital position in conjunction with our understanding of the rules as

they evolve.

•If implemented by U.S. regulators as proposed, Basel III could significantly increase our capital

requirements. Basel III and the Financial Reform Act propose the disqualification of Trust Securities

from Tier 1 capital, with the Financial Reform Act proposing that the disqualification be phased in

from 2013 to 2015. Basel III also proposes the deduction of certain assets from capital (deferred tax

assets, MSRs, investments in financial firms and pension assets, among others, within prescribed

limitations), the inclusion of accumulated OCI in capital, increased capital for counterparty credit risk,

and new minimum capital and buffer requirements. The phase-in period for the capital deductions is

proposed to occur in 20 percent increments from 2014 through 2018 with full implementation by

December 31, 2018. An increase in capital requirements for counterparty credit is proposed to be

effective January 2013. The phase-in period for the new minimum capital requirements and related

buffers is proposed to occur between 2013 and 2019. U.S. regulators have indicated a goal to adopt

final rules by year-end 2011 or early 2012. We have made the implementation and migration of the

new capital rules our primary capital related priority. We intend to continue to build capital through

retaining earnings, actively reducing legacy asset portfolios and implementing other non-dilutive

capital related initiatives including focusing on the reduction of higher risk-weighted assets. As the

new rules come into effect, we currently anticipate that we will be in excess of the minimum required

ratios without needing to raise new equity capital. For additional information on MSRs, refer to Note

19 –Mortgage Servicing Rights to the Consolidated Financial Statements and for additional

information on deferred tax assets, refer to Note 21 –Income Taxes to the Consolidated Financial

Statements of the Corporation’s 2010 Annual Report on Form 10-K.

•On July 19, 2011, the Basel Committee published the consultative document “Globally systemic

important banks: Assessment methodology and the additional loss absorbency requirement”, which

sets out measures for global, systemically important financial institutions including the methodology

for measuring systemic importance, the additional capital required (the SIFI buffer), and the

arrangements by which they will be phased in. As proposed, the SIFI buffer would be met with

additional Tier 1 common equity ranging from one percent to 3.5 percent and will be phased in from

2016 through 2018. U.S. banking regulators have not yet provided similar rules or guidance for U.S.

implementation of a SIFI buffer.

•We also note that there remains significant uncertainty regarding the final Basel III requirements as

the U.S. has only issued final rules for Basel II at this time. Impacts may change as the U.S. finalizes

rules under Basel III and the regulatory agencies interpret the final rules during the implementation

process. For additional information regarding Basel II, Basel III, Market Risk Rules and other


proposed regulatory capital changes, see Regulatory Capital on page 63 of the MD&A of the

Corporation’s 2010 Annual Report on Form 10-K.

(Source: Bank of America’s 2011 second-quarter 10-Q.)

City Bank in Japan

Company overview

Company name Citibank Japan Ltd.

Citibank Japan Ltd.

Head office

address

Citigroup Center,

3-14 Higashi-Shinagawa 2-chome,

Shinagawa-ku, Tokyo 140-8639

Bank code 0401

Head office branch code 730

Telephone 0120-039-104 or 03-5462-5000

Business Banking services

Commencement of operations July 1, 2007 (International Banking Corporation,

a predecessor to Citibank, opened its Yokohama

branch in October 1902)

Total net assets ¥265.3 billion (as of September 30, 2011)

Capital ¥123.1 billion (as of September 30, 2011)

Capital adequacy ratio 26.46% (as of September 30, 2011)

Employees 1,790 (as of September 30, 2011)

Branches(including head office) 38 (including 32 retail branches / mini-branches

and 1 internet-only branch)

(as of September 30, 2011)

Citi’s Mission Statement and Principles

Citi works tirelessly to serve individuals, communities, institutions and nations. With 200 years of

experience meeting the world's toughest challenges and seizing its greatest opportunities, we strive to

create the best outcomes for our clients with financial solutions that are simple, creative and

responsible. An institution connecting over 1,000 cities, 160 countries and millions of people, we are

your global bank; we are Citi.


The four key principles—the values that guide us as we perform our mission—are:

• Common Purpose — One team, with one goal: serving our clients and stakeholders.

• Responsible

Finance

— Conduct that is transparent, prudent and dependable.

• Ingenuity — Enhancing our clients' lives through innovation that harnesses the

breadth and depth of our information, global network, and world-

class products.

• Leadership — Talented people with the best training who thrive in a diverse

meritocracy that demands excellence, initiative and courage.

CJL’s Management Strategy

CJL is the first locally incorporated foreign bank in the Japanese market. CJL’s goal is to fully

respond to the needs of our retail and corporate clients with innovative products and services and

through Citigroup’s global network – thereby playing a leading role in the financial industry. With

strategic coordination across business lines and group companies, CJL aims to increase its client and

revenue base and improve its local asset-liability balance. Based on our long-term vision, we

endeavor to continually develop our business and gain increased presence in the market, leveraging

our unique position as a locally incorporated foreign bank. CJL has a long and distinguished history in

Japan. We have a proud legacy of focusing our energy fully on our customers, delivering new

innovations and market firsts, bringing the best of the world to our local customers, providing an

excellent working environment and investing in future growth.

CJL is focused on a balanced growth strategy through its Retail Banking Division and Corporate

Banking Division. The Retail Banking Division continually invests in new product, distribution and

service innovations to grow its mass affluent customer base and expand its premier Citigold

proposition. The Corporate Banking Division has a selected core group of relationships to which it

leverages and delivers Citigroup's global strengths, providing high quality financial products, services

and advice to help our customers succeed. Both Divisions continually look to improve customer

experience and operational efficiencies through extensive ongoing reengineering programs.

CJL is subject to the very high regulatory standards expected of all Japanese banks, as well as the

international standards expected by our regulators in the United States. We have made best efforts to


enhance sound governance and internal control structures since the localization of our banking

operations in July 2007 and will continue our utmost efforts to improve these structures further to

meet both Japanese and global best practices. We are committed to confront in a resolute manner any

undue demands and anti-social forces that threaten social order and safety.

CJL is committed to providing a working environment where its employees can thrive and achieve

their full potential. By attracting and training the best people and giving them broad career

development opportunities, we aim to foster an environment where employees are able to provide our

clients with outstanding financial products, service and advice.

CJL is, and will continue to be, active in diversity initiatives and the community. We have focused on

enhancing the opportunities available to working parents in the workplace through the childcare

center in our head office and other support programs. Our community activities focus broadly on

improving access to financial education and assisting those with disabilities within the communities in

which we operate.

In order to fully achieve the above objectives, we seek to focus on the following principles, under the

overarching theme of "Growth through Innovation" and backed by a strong foundation of

compliance and control frameworks.

Live Client First

Create a client-centric organization and value system to seamlessly meet client needs;

design our products, services and processes around the customer experience.

Be the World's Best Team

Promote a cohesive "One Citi" culture across business lines and develop talent focused

on delivering the best financial products and services for our clients.

Serve Stronger Value Propositions

Leverage "One Citi" capabilities to respond to our clients' increasing demand for

innovative products and services across all businesses, and continue to strive for speed

and simplicity.

Optimize and Protect the Franchise

Strengthen the retail and corporate banking business platforms as well as business

partnerships with other group companies, focusing our resources on growth, innovation


and operating efficiency driven by the relentless pursuit of excellence.

Grow Market Share and Recognition

Deliver increased market share and recognition through a renewed focus on growth.

Build an Iconic Brand

Strengthen our brand commensurate with our 100+ year legacy in Japan based on a

foundation of trust, integrity and innovation.

Deliver Financial Performance

Deliver profit growth and improved operating efficiency.

Citibank Japan financial data

Key financial data (as of September 30, 2011)

(Billion of Yen, %)

Total Deposits 3,198

Total Assets 4,070

Net Assets 265.3

Capital Adequacy Ratio 26.46%

Net Assets Ratio 6.5%

Total Net Assets per Share 1.08yen


Credit ratings

As of July 12, 2011

Moody's S&P Fitch

Rating Outlook Rating Outlook Rating Outlook

Citibank Japan Ltd.

Long Term A2 Negative A+ Negative A+ Watch Negative

Citigroup Inc.

Long Term A3Rating Under Review

Watch DowngradeA Negative A+ Watch Negative

Citibank, N.A.

Long Term A1Rating Under Review

Watch DowngradeA+ Negative A+ Watch Negative

Revision of Financial Flash Report (Unconsolidated) Under Japanese GAAP

January, 2010

Citibank Japan announced a restatement of its Capital Adequacy Ratios for September 2009.

After this correction the Capital Adequacy Ratio was changed as follows:


Current Correction Corrected

Credit Risk 981,658 (13,319) 968,339

Market Risk 60,681 60,681

Operational Risk 190,379 190,379

Total Risk Exposure 1,232,718 (13,319) 1,219,399

Tier I Capital ratio 23.7% 0.3% 24.0%

Total Capital ratio 24.3% 0.3% 24.6%

City Bank Indonesia

City Bank in Indonesia is a branch of Citibank N.A, headquartered in New York. It was established in

Indonesia in 1968. It is the largest foreign bank in Indonesia with 22 branches and107 ATMs located

in Medan, Jakarta, Bandung, Semarang, Surabaya and Denpasar .

Citibank Indonesia has total asset of Rp 54 trillions and a current CAR (Capital Adequacy Ratio)of

24,8%, which is far ahead of the 8%requirement set by Bank Indonesia. Citibank Indonesia’ ROE of

20,08% and ROA of 4,95% shows the strength of the balance sheet.


Laporan Keuangan Publikasi Triwulanan

Perhitungan Rasio Keuangan

CITIBANK N.A.

CITIBANK TOWER 7th FLOOR JL.JEND.SUDIRMAN KAV 54-55 JKT-12190

Telp. 021-52908545

per Desember 2009 s.d 2007

(Dalam Persentase)

Pos-pos 12-2009 12-2008 12-2007

I. Permodalan

1. CAR dengan memperhitungkan risiko kredi

t 31.83 25.56 23.32

2. CAR dengan memperhitungkan risiko pasa

r 30.46 24.12 20.79


3. Aktiva tetap terhadap modal 9.18 9.65 12.91

II. Kualitas Aktiva

1. Aktiva produktif bermasalah 4.93 3.96 3.5

2. PPA Produktif terhadap Aktiva Produktif 5.5 4.62 3.65

3. Pemenuhan PPA produktif 125.13 125.92 106.84

4. Pemenuhan PPA non produktif

5. NPL gross 10.23 8.29 7.01

6. NPL net 1.52 2.35 .99

III. Rentabilitas

1. ROA 5.74 5.64 5.68

2. ROE 25.29 28.11 33.18

3. NIM 6.7 7.65 8.5

4. BOPO 65.21 81.71 64.17

IV. Likuiditas

LDR 73.63 79.47 70.21

V. Kepatuhan (Compliance)

1.a. Persentase Pelanggaran BMPK

a.1. Pihak terkait

a.2. Pihak tidak terkait

1.b. Persentase Pelampauan BMPK

b.1. Pihak terkait

b.2. Pihak tidak terkait

2. GWM Rupiah 5.1 6.22 9.42

3. PDN 7.54 3.27 5.9




CITIBANK N.A.


Telp. 021-52908545

per September 2009 s.d 2007

(Dalam Persentase)

Pos-pos 09-2009 09-2008 09-2007

I. Permodalan


t 31.6 22.95 24.15


r 30.05 20.69 19.98


II. Kualitas Aktiva





5. NPL gross 1.63 1.98

6. NPL net 9.74 8.3 5.15

III. Rentabilitas

1. ROA 6.39 4.82 5.81

2. ROE 29.24 27.27 34.24

3. NIM 6.55 7.82 8.53

4. BOPO 62.22 66.98 61.05

IV. Likuiditas

LDR 65.37 78.12 67.85




a.1. Pihak terkait



b.1. Pihak terkait


2. GWM Rupiah 5.02 8.03 9.07

3. PDN 8.25 5.56 14.03



CITIBANK N.A.


Telp. 021-52908545

per Juni 2009 s.d 2007

(Dalam Persentase)

Pos-pos 06-2009 06-2008 06-2007

I. Permodalan


t 30.76 22.24 25.17


r 29.04 20.06 20.33


II. Kualitas Aktiva





5. NPL gross 9.23 8.14


6. NPL net 1.4 2.05 4.65

III. Rentabilitas

1. ROA 6.2 4.26 6.25

2. ROE 28.24 24.23 33.86

3. NIM 6.19 7.84 8.67

4. BOPO 65.29 68.65 62.69

IV. Likuiditas

LDR 65.6 74.26 71.17



a.1. Pihak terkait



b.1. Pihak terkait


2. GWM Rupiah 5.02 9.03 9.24

3. PDN 9.16 13.2 11.04



CITIBANK N.A.


Telp. 021-52908545

per Maret 2009 s.d 2007

(Dalam Persentase)

Pos-pos 03-

200903-2008

03-

2007

I. Permodalan



t 29.42 25.68 24.52


r 28.11 22.19 18.7


II. Kualitas Aktiva





5. NPL gross 8.89 7.33

6. NPL net 2.05 .99 4.75

III. Rentabilitas

1. ROA 6.37 4.53 5.28

2. ROE 26.04 25.56 28.56

3. NIM 6.12 7.95 8.85

4. BOPO 69.65 66.77 65.57

IV. Likuiditas

LDR 72.36 73.6 81.43



a.1. Pihak terkait



b.1. Pihak terkait



2. GWM Rupiah 5.04 9.05 8.04

3. PDN 5.6 5.58 1.51

Banyak hal yang telah terjadi sejak tahun lalu saat gejolak krisis keuangan global muncul. Di Citi,

kami mengambil keputusan dengan cepat dan proaktif untuk mempersiapkan diri dalam

menghadapi berbagai tantangan dengan cara memperkuat tingkat modal dan likuiditas. Pemerintah

di berbagai negara juga telah menanggapi krisis keuangan ini dengan memberikan dukungan nyata

terhadap sistem perbankan. Dengan demikian, Anda tidak perlu khawatir karena dana yang Anda

simpan aman bersama kami.

• Modal dan Kesepakatan dengan Pemerintah Amerika Serikat: Baru-baru ini, Pemerintah

Amerika Serikat memberikan tambahan US$20 milyar untuk semakin memperkuat modal Citi.

Hal ini bersama dengan prasyarat lainnya akan meningkatkan jumlah modal berupa tambahan

senilai US$40 milyar. Dengan demikian, jika dijumlahkan dengan modal yang sebelumnya telah

diperoleh yaitu sebesar US$85 milyar, maka hal ini menjadikan tingkat kecukupan modal Tier 1

mencapai 14,8%. Dengan demikian, Citi merupakan bank dengan jumlah kecukupan modal

terbesar di dunia.

Citibank, N.A., Indonesia sebagai salah satu bank yang beroperasi di Indonesia mematuhi seluruh

ketentuan dan prinsip kehati-hatian yang di atur oleh Bank Indonesia, selaku Bank Sentral. Efektif

30 September 2008, Citibank, N.A. Indonesia menyediakan Rp. 6 trilyun sebagai modal

(regulatory capital) dan mempertahankan rasio kecukupan modal (CAR – Capital Adequacy

Ratio) sebesar 20,69% dimana jauh melebihi ketentuan minimum sebesar 8% dari Bank

Indonesia.

• Likuiditas: Kami memiliki model perbankan universal yang unik dan beragam dengan 200 juta

nasabah di lebih dari 100 negara, yang memberikan kekuatan dan stabilitas pendapatan

operasional serta simpanan (deposit) yang mencapai US$780 milyar, sebagai akses pendanaan

dan bukti tingkat likuiditas yang tinggi. Selain itu, seperti bank-bank lain di Amerika Serikat,

kami memiliki akses likuiditas melalui U.S. Federal Reserve.


• Neraca Keuangan dan Rating: Neraca keuangan kami lebih dari US$ 2 triliun dan rating kredit

kami menduduki peringkat tertinggi di dunia untuk kategori institusi finansial.

• Garansi Deposito/Tabungan: Seluruh dana yang disimpan di bank-bank di Indonesia, termasuk

Citibank, N.A Indonesia, dijamin oleh Lembaga Penjamin Simpanan sampai dengan Rp. 2 milyar,

sesuai dengan peraturan perundangan yang berlaku.

Sehubungan dengan pergerakan harga saham, perlu dipahami bahwa keamanan simpanan dana Anda

di bank manapun tidak terpengaruh oleh naik turunnya harga saham. Hal utama yang perlu

diperhatikan adalah kemampuan sebuah bank untuk memenuhi kewajibannya dan ini sangat

tergantung pada kekuatan modal dan likuiditas. Kami telah mengkaji ulang beberapa kemungkinan

yang akan terjadi dan kami sangat yakin bahwa modal, likuiditas dan kekuatan arus kas kami akan

terus menjadi kekuatan finansial kami dalam menghadapi masa-masa sulit.

Citi memiliki 200 tahun sejarah kepemimpinan finansial di seluruh dunia dan kami telah melayani

nasabah di Asia selama lebih dari 100 tahun. Kami berupaya untuk terus memberikan yang terbaik

untuk Anda di masa mendatang.

J.P Morgan Chase & Co.

J.P. Morgan & Co. was a commercial and investment banking institution based in the United States

founded by J. Pierpont Morgan and commonly known as the House of Morgan or simply Morgan.

Today, J.P. Morgan is the investment banking arm of JPMorgan Chase.

The firm is the direct predecessor of two of the largest banking institutions in the United States and

globally, JPMorgan Chase and Morgan Stanley.

In 2000, J.P. Morgan was acquired by Chase Manhattan Bank to form JPMorgan Chase & Co., one of

the largest global banking institutions. Today, the J.P. Morgan brand is used to market certain

JPMorgan Chase wholesale businesses, including investment banking, commercial banking and asset

management. The J.P. Morgan branding was revamped in 2008 to return to its more traditional

appearance after several years of depicting the "Chase symbol to the right of a condensed and

modernized "JPMorgan".


http://en.wikipedia.org/wiki/Chase_(bank)

http://en.wikipedia.org/wiki/Asset_management


http://en.wikipedia.org/wiki/Commercial_banking

http://en.wikipedia.org/wiki/Investment_banking

http://en.wikipedia.org/wiki/JPMorgan_Chase_%26_Co.

http://en.wikipedia.org/wiki/Chase_Manhattan_Bank

http://en.wikipedia.org/wiki/Morgan_Stanley

http://en.wikipedia.org/wiki/JPMorgan_Chase


http://en.wikipedia.org/wiki/J._Pierpont_Morgan



Between 1959 and 1989, J.P. Morgan operated as the Morgan Guaranty Trust, following its merger

with the Guaranty Trust Company.

In 2008 JP Morgan was crowned Deal of the Year - Equity Market Deal of the Year at the 2008 ALB

Japan Law Awards.

The origins of the firm date back to 1854 when Junius S. Morgan joined a London-based banking

business headed by George Peabody. Over the next ten years, Junius took control of George

Peabody & Co., changing the name to J.S. Morgan & Co. Junius's son, J. Pierpont Morgan, went to

work with his father and would later found what would become J.P. Morgan & Co.

J.P. Morgan & Co., was founded in New York in 1871 as Drexel, Morgan & Co. by J. Pierpont Morgan

and Philadelphia banker Anthony J. Drexel, founder of what is now Drexel University. The new

merchant banking partnership served initially as an agent for Europeans investing in the United

States.

In 1933, the provisions of the Glass–Steagall Act forced J.P. Morgan & Co. to separate its investment

banking from its commercial banking operations. J.P. Morgan & Co. chose to operate as a

commercial bank, because after the stock market crash of 1929, investment banking was in some

disrepute and commercial lending was perceived to be more the profitable and prestigious business.

Additionally, many within J.P. Morgan believed that a change in the political climate would allow the

company to resume its securities businesses but that it would be nearly impossible to reconstitute

the bank if it were disassembled.

In 1935, after being barred from securities business for over a year, the heads of J.P. Morgan made

the decision to spin off its investment banking operations. Two J.P. Morgan partners, Henry S.

Morgan (son of Jack Morgan and grandson of J. Pierpont Morgan) and Harold Stanley, founded

Morgan Stanley on September 16, 1935 with $6.6 million of nonvoting preferred stock from J.P.

Morgan partners. At the beginning, Morgan Stanley's headquarters were at 2 Wall Street, just down

the street from J.P. Morgan, and Morgan Stanley bankers routinely used 23 Wall Street when closing

transactions.

In the years following the spin-off of Morgan Stanley, the securities business proved robust, while

the parent firm, which incorporated in 1940,was a little sleepy. By the 1950s J.P. Morgan was only a

mid-size bank. In order to bolster its position, in 1959, J.P. Morgan merged with the Guaranty Trust

Company of New York to form the Morgan Guaranty Trust Company. The two banks already had

numerous relationships between them and had complementary characteristics as J.P. Morgan


http://en.wikipedia.org/wiki/Guaranty_Trust_Company



http://en.wikipedia.org/wiki/Corporate_spin-off

http://en.wikipedia.org/wiki/23_Wall_Street



http://en.wikipedia.org/wiki/Harold_Stanley

http://en.wikipedia.org/wiki/J._Pierpont_Morgan

http://en.wikipedia.org/wiki/Henry_S._Morgan

http://en.wikipedia.org/wiki/Henry_S._Morgan

http://en.wikipedia.org/wiki/Commercial_bank




http://en.wikipedia.org/wiki/Glass%E2%80%93Steagall_Act

http://en.wikipedia.org/wiki/Drexel_University

http://en.wikipedia.org/wiki/Anthony_J._Drexel

http://en.wikipedia.org/wiki/J.P._Morgan

http://en.wikipedia.org/wiki/J.S._Morgan_%26_Co.

http://en.wikipedia.org/wiki/George_Peabody_%26_Co.

http://en.wikipedia.org/wiki/George_Peabody_%26_Co.

http://en.wikipedia.org/wiki/George_Peabody

http://en.wikipedia.org/wiki/Junius_S._Morgan


brought a prestigious name and high quality clients and bankers while Guaranty Trust brought a

significant amount of capital. Although Guaranty Trust was nearly four times the size of J.P. Morgan

at the time of the merger in 1959, J.P. Morgan was considered the buyer and nominal survivor and

former J.P. Morgan employees were the primary managers of the merged company.

Ten years after the merger, Morgan Guaranty established a bank holding company called J.P.

Morgan & Co. Inc., but continued to operate as Morgan Guaranty through the 1980s before

beginning to migrate back to use of the J.P. Morgan brand. In 1988, the company once again began

operating exclusively as J.P. Morgan & Co.

Also in the 1980s, J.P. Morgan along with other commercial banks pushed the envelope of product

offerings toward investment banking, beginning with the issuance of commercial paper. In 1989, the

Federal Reserve permitted J.P. Morgan to be the first commercial bank to underwrite a corporate

debt offering In the 1990s, J.P. Morgan moved quickly to rebuild its investment banking operations

and by the late 1990s would emerge as a top-five player in securities underwriting.

By the late 1990s, J.P. Morgan had emerged as a large but not dominant commercial and investment

banking franchise with an attractive brand name and a strong presence in debt and equity securities

underwriting. Beginning in 1998, J.P. Morgan openly discussed the possibility of a merger, and

speculation of a pairing with banks including Goldman Sachs, Chase Manhattan Bank, Credit Suisse

and Deutsche Bank AG were prevalent.Chase Manhattan had emerged as one of the largest and

fastest growing commercial banks in the United States through a series of mergers over the previous

decade. In 2000 Chase, which was looking for yet another transformational merger to improve its

position in investment banking, merged with J.P. Morgan to form J.P. Morgan Chase & Co.

The combined JPMorgan Chase would become one of the largest banks both in the United States

and globally offering a full complement of investment banking, commercial banking, retail banking,

asset management, private banking and private equity businesses. In 2011, JPMorgan Asset

Management was ranked number two in Institutional Investor's Hedge Fund 100 ranking, with $54.2

billion in assets under management.


http://en.wikipedia.org/wiki/Private_equity

http://en.wikipedia.org/wiki/Private_banking


http://en.wikipedia.org/wiki/Retail_banking




http://en.wikipedia.org/wiki/Deutsche_Bank_AG

http://en.wikipedia.org/wiki/Credit_Suisse

http://en.wikipedia.org/wiki/Chase_Manhattan_Bank

http://en.wikipedia.org/wiki/Goldman_Sachs

http://en.wikipedia.org/wiki/Federal_Reserve

http://en.wikipedia.org/wiki/Commercial_paper

http://en.wikipedia.org/wiki/Bank_holding_company

Daftar Pustaka

Kesehatan Bank.2011 . [online](http://septianadc.blogspot.com/2011/04/analisis-kesehatan-bank-

menurut-rasio_17.html?zx=31f95ef37b82f1a0, diakses 10 November 2011)

Bank of America, Financial Report. 2011. [online]

(http://www.bankofamerica.com/annualreport/2005/financial_review/20_liquidityRisk.cfm

, diakses 10 November 2011)

Citi Bank. 2011, [online] (http://www.citibank.co.jp/en/aboutus/companyoverview/index.html


JP Morgan Chase. 2011. [online](http://www.jpmorganchase.com/corporate/Home/home.htm



http://www.jpmorganchase.com/corporate/Home/home.htm

http://www.citibank.co.jp/en/aboutus/companyoverview/index.html

http://www.bankofamerica.com/annualreport/2005/financial_review/20_liquidityRisk.cfm

http://septianadc.blogspot.com/2011/04/analisis-kesehatan-bank-menurut-rasio_17.html?zx=31f95ef37b82f1a0

http://septianadc.blogspot.com/2011/04/analisis-kesehatan-bank-menurut-rasio_17.html?zx=31f95ef37b82f1a0

Capital Adequacy Ratios for Banks

Documents