REG - Secure Trust BankArbuthnot Banking - Final Results <Origin Href="QuoteRef">ARBB.L</Origin> <Origin Href="QuoteRef">STBS.L</Origin> - Part 5
19/03/2015 07:01
- Part 5: For the preceding part double click ID:nRSS8407Hd
(0.1) (0.1) - - -
Deposits from customers 436.6 (457.0) (64.3) (208.7) (181.1) (2.9)
Other financial liabilities 17.0 (17.0) (17.0) - - -
453.7 (474.1) (81.4) (208.7) (181.1) (2.9)
The tables below analyse the contractual undiscounted cash flows for the Company's financial liabilities into relevant maturity groupings:
Carrying amount Gross nominal inflow/ (outflow) Not more than 3 months More than 3 months but less than 1 year More than 1 year but less than 5 years More than 5 years
At 31 December 2014 £million £million £million £million £million £million
Non-derivative financial liabilities
Due to banks 15.9 (15.9) (15.9) - - -
Deposits from customers 608.4 (635.2) (87.3) (257.6) (255.0) (35.3)
Other financial liabilities 15.5 (15.5) (15.5) - - -
639.8 (666.6) (118.7) (257.6) (255.0) (35.3)
Carrying amount Gross nominal inflow/ (outflow) Not more than 3 months More than 3 months but less than 1 year More than 1 year but less than 5 years More than 5 years
At 31 December 2013 £million £million £million £million £million £million
Non-derivative financial liabilities
Due to banks 0.1 (0.1) (0.1) - - -
Deposits from customers 436.6 (457.0) (64.3) (208.7) (181.1) (2.9)
Other financial liabilities 10.5 (10.5) (10.5) - - -
447.2 (467.6) (74.9) (208.7) (181.1) (2.9)
The maturities of assets and liabilities and the ability to replace, at an acceptable cost, interest-bearing financial
liabilities as they mature are important factors in assessing the liquidity of the Company and Group and its exposure to
changes in interest rates and exchange rates.
Other financial liabilities, as shown above, do not include non-interest accruals as these are not classed as financial
liabilities.
(d) Operational risk (unaudited)
Operational risk is the risk of direct or indirect loss arising from a wide variety of causes associated with the Group's
processes, personnel, technology and infrastructure, and from external factors other than the risks identified above.
Operational risks arise from all of the Group's operations.
The Group's objective is to manage operational risk so as to balance the avoidance of financial losses and damage to the
Group's reputation with overall cost effectiveness and innovation. In all cases, the Group's policy requires compliance
with all applicable legal and regulatory requirements.
The Corporate Governance statement on pages 32 and 33 describes the Group's system of internal controls which are used to
mitigate against operational risk. An operational risk department within the Bank also supports and provides assurance to
the business in recognising, assessing and managing risk. Compliance with Group standards is supported by a programme of
periodic reviews undertaken by an internal audit function. The results of the internal audit reviews are discussed with the
Company's senior management with summaries submitted to the Group Audit Committee.
6. Capital management
The Group's capital management policy is focused on optimising shareholder value, in a safe and sustainable manner. There
is a clear focus on delivering organic growth and ensuring capital resources are sufficient to support planned levels of
growth. The Board regularly reviews the capital position.
In accordance with the EU's Capital Requirements Directive IV (CRD IV) and the required parameters set out in the EU's
Capital Requirements Regulation (CRR), the Arbuthnot Banking Group's Internal Capital Adequacy Assessment Process (ICAAP),
of which the Group is a major component, is embedded in the risk management framework of the Group and is subject to
ongoing updates and revisions when necessary. However, at a minimum, the ICAAP is updated annually as part of the business
planning process. The ICAAP is a process that brings together the management framework (i.e. the policies, procedures,
strategies, and systems that the Group has implemented to identify, manage and mitigate its risks) and the financial
disciplines of business planning and capital management.
Not all material risks can be mitigated by capital, but where capital is appropriate the Board has adopted a "Pillar 1
plus" approach to determine the level of capital the Group needs to hold. This method takes the Pillar 1 capital formula
calculations (standardised approach for credit, market and operational risk) as a starting point, and then considers
whether each of the calculations delivers a sufficient capital sum adequately to cover management's anticipated risks.
Where it is considered that the Pillar 1 calculations do not reflect the risk, an additional capital add-on in Pillar 2
should be applied, as per the Individual Capital Guidance (ICG) issued by the Prudential Regulation Authority (PRA).
Pillar 3 complements the minimum capital requirements (Pillar 1) and the supervisory review process (Pillar 2). Its aim is
to encourage market discipline by developing a set of disclosure requirements which would allow market participants to
assess key pieces of information on a firm's capital, risk exposures and risk assessment processes. Pillar 3 disclosures
for the Arbuthnot Banking Group for the year ended 31 December 2014 are published as a separate document on the Arbuthnot
Banking Group website.
The following table shows the regulatory capital resources as managed by the solo-consolidated Group: 2014 2013
£million £million
Tier 1
Share capital 7.3 6.3
Share premium 79.3 28.2
Retained earnings 38.7 29.0
Revaluation reserve 0.2 0.2
Goodwill (0.3) (0.3)
Intangible assets net of attributable deferred tax (2.8) (3.1)
Deferred tax assets due to losses (1.0) (1.9)
Common Equity Tier 1 capital 121.4 58.4
Tier 2
Collective allowance for impairment of loans and advances 2.0 1.6
Total Tier 2 capital 2.0 1.6
Own Funds 123.4 60.0
Reconciliation to total equity:
Goodwill and other intangible assets net of attributable deferred tax 3.1 3.4
Collective allowance for impairment of loans and advances (2.0) (1.6)
Deferred tax assets due to losses 1.0 1.9
Net cumulative losses of non-solo consolidated entities (0.6) (1.2)
Dividends received from non-solo consolidated entities - (0.5)
Cash flow hedging reserve - (0.4)
Total equity 124.9 61.6
The Group forms part of the Arbuthnot Banking Group's ICAAP which includes a summary of the capital required to mitigate
the identified risks in its regulated entities and the amount of capital that the Group has available. The PRA sets ICG for
each UK bank calibrated by reference to its Capital Resources Requirement, broadly equivalent to 8% of risk weighted assets
and thus representing the capital required under Pillar 1 of the Basel III framework. The ICAAP is a key input into the
PRA's ICG setting process, which addresses the requirements of Pillar 2 of the Basel III framework. The PRA's approach is
to monitor the available capital resources in relation to the ICG requirement. The Group maintains an extra internal buffer
and capital ratios are reviewed on a monthly basis to ensure that external and internal requirements are adhered to.
7. Net interest income
2014 2013
£million £million
Cash and balances at central banks 0.3 -
Loans and advances to banks - 0.2
Loans and advances to customers 93.1 73.6
Debt securities held-to-maturity 0.2 -
Interest receivable and similar income 93.6 73.8
Deposits from customers (14.2) (12.9)
Interest expense and similar charges (14.2) (12.9)
Net interest income 79.4 60.9
In the previous year £0.2 million of interest income arising from debt securities held-to-maturity was included as interest
income on loans and advances to banks.
8. Operating expenses
2014 2013
Operating expenses comprise: £million £million
Staff costs, including those of directors:
Wages and salaries 25.7 20.1
Social security costs 2.4 1.9
Pension costs 0.9 0.7
Share based payment transactions 1.5 2.2
Depreciation of property, plant and equipment (Note 18) 0.5 0.7
Amortisation of intangible assets (Note 16) 2.5 2.5
Operating lease rentals 1.6 1.4
Other administrative expenses 21.4 16.3
Total operating expenses 56.5 45.8
2014 2013
Remuneration of the auditor and its associates, excluding VAT, was as follows: £'000 £'000
Fees payable to the Company's auditor for the audit of the Company's annual accounts 138 132
Fees payable to the Company's auditor for other services:
The audit of the Company's subsidiaries, pursuant to legislationRecent news on Arbuthnot Banking
See all newsREG - Arbuthnot Banking - Audited Final Results
AnnouncementREG - Arbuthnot Banking - Pre Close Trading Update
AnnouncementREG - Arbuthnot Banking - Director/PDMR Shareholding
AnnouncementREG - Arbuthnot Banking - Renewal of Tier 2 Regulatory Capital Loan facility
AnnouncementREG - Arbuthnot Banking - Director/PDMR Shareholding
Announcement