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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), 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
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. CAR is similar to leverage; in the most basic formulation, it is comparable to the inverse of debt-toequity 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. 2 | Capital Adequacy Ratio
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 3 | Capital Adequacy Ratio
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. 4 | Capital Adequacy Ratio
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.
5 | Capital Adequacy Ratio
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; 6 | Capital Adequacy Ratio
_ future tax benefits; and _ intangible assets, e.g. goodwill. Upper Tier Two Capital In general, this comprises: _ 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 In general, this comprises: _ 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.
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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 Cash Short term claims on governments
Percentage Risk Weighting 0 0 10 20 20 50 100 8 | Capital Adequacy Ratio
Long term claims on governments (> 1 year) Claims on banks Claims on public sector entities Residential mortgages All other credit exposures
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 e.g. guarantees, bills of exchange, letters of credit, risk participations Asset sales with recourse Commitments with certain drawdown e.g. forward purchases, partly paid shares Transaction related contracts e.g. performance bonds, bid bonds Underwriting and sub-underwriting facilities Other commitments with an original maturity more than 1 year Short term trade related contingencies e.g. letters of credit 50 50 20 50 100 100 100
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:
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(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 Exchange rate contracts > 1 year 1% 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
10 | Capital Adequacy Ratio
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. 11 | Capital Adequacy Ratio
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
12 | Capital Adequacy Ratio
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
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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
December 31, 2005 Bank of America Corporation Bank of America, N.A. Short-term Borrowing s P-1 A-1+ F1+ Longterm Debt Aa1 AA AA-
Senior Debt Moody’s Standard Poor’s Fitch, Inc. & AAAAAa2
Subordinated Debt Aa3 A+ A+
Commercial Paper P-1 A-1+ F1+
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 14 | Capital Adequacy Ratio
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.
15 | Capital Adequacy Ratio
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
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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 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
17 | Capital Adequacy Ratio
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)
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
18 | Capital Adequacy Ratio
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 19 | Capital Adequacy Ratio
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. Head office address Bank code Head office branch code Telephone Business Commencement of operations Citibank Japan Ltd. Citigroup Center, 3-14 Higashi-Shinagawa 2-chome, Shinagawa-ku, Tokyo 140-8639 0401 730 0120-039-104 or 03-5462-5000 Banking services July 1, 2007 (International Banking Corporation, a predecessor to Citibank, opened its Yokohama branch in October 1902) Total net assets Capital Capital adequacy ratio Employees ¥265.3 billion (as of September 30, 2011) ¥123.1 billion (as of September 30, 2011) 26.46% (as of September 30, 2011) 1,790 (as of September 30, 2011)
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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 — • Responsible Finance • Ingenuity — Enhancing our clients' lives through innovation that harnesses the breadth and depth of our information, global network, and worldclass products. • Leadership — Talented people with the best training who thrive in a diverse meritocracy that demands excellence, initiative and courage. — One team, with one goal: serving our clients and stakeholders. Conduct that is transparent, prudent and dependable.
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. 21 | Capital Adequacy Ratio
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.
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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 Total Assets Net Assets Capital Adequacy Ratio Net Assets Ratio Total Net Assets per Share
3,198 4,070 265.3 26.46% 6.5% 1.08yen
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As of July 12, 2011
Citibank Japan Ltd.
Rating Under Review Watch Downgrade
Rating Under Review Watch Downgrade
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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 Credit Risk Market Risk Operational Risk Total Risk Exposure Tier I Capital ratio Total Capital ratio 981,658 60,681 190,379 1,232,718 23.7% 24.3% (13,319) 0.3% 0.3% Correction (13,319) Corrected 968,339 60,681 190,379 1,219,399 24.0% 24.6%
City Bank Indonesia
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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.
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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 I. Permodalan 1. CAR dengan memperhitungkan risiko kredi t 2. CAR dengan memperhitungkan risiko pasa r 3. Aktiva tetap terhadap modal II. Kualitas Aktiva 1. Aktiva produktif bermasalah 2. PPA Produktif terhadap Aktiva Produktif 3. Pemenuhan PPA produktif 4. Pemenuhan PPA non produktif 5. NPL gross 6. NPL net III. Rentabilitas 1. ROA 2. ROE 3. NIM 4. BOPO IV. Likuiditas LDR 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 3. PDN 5.1 7.54 6.22 3.27 9.42 5.9 73.63 79.47 70.21 5.74 25.29 6.7 65.21 5.64 28.11 7.65 81.71 5.68 33.18 8.5 64.17 10.23 1.52 8.29 2.35 7.01 .99 4.93 5.5 125.13 3.96 4.62 125.92 3.5 3.65 106.84 31.83 30.46 9.18 25.56 24.12 9.65 23.32 20.79 12.91 12-2009 12-2008 12-2007
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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 September 2009 s.d 2007 (Dalam Persentase) Pos-pos I. Permodalan 1. CAR dengan memperhitungkan risiko kredi t 2. CAR dengan memperhitungkan risiko pasa r 3. Aktiva tetap terhadap modal II. Kualitas Aktiva 1. Aktiva produktif bermasalah 2. PPA Produktif terhadap Aktiva Produktif 3. Pemenuhan PPA produktif 4. Pemenuhan PPA non produktif 5. NPL gross 6. NPL net III. Rentabilitas 1. ROA 2. ROE 3. NIM 4. BOPO IV. Likuiditas LDR V. Kepatuhan (Compliance) 1.a. Persentase Pelanggaran BMPK a.1. Pihak terkait a.2. Pihak tidak terkait 1.b. Persentase Pelampauan BMPK 65.37 78.12 67.85 6.39 29.24 6.55 62.22 4.82 27.27 7.82 66.98 5.81 34.24 8.53 61.05 1.63 9.74 1.98 8.3 5.15 4.3 5.06 125.67 3.94 3.84 103.12 2.43 3.39 110.16 31.6 30.05 8.68 22.95 20.69 11.66 24.15 19.98 12.48 09-2009 09-2008 09-2007
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b.1. Pihak terkait b.2. Pihak tidak terkait 2. GWM Rupiah 3. PDN 5.02 8.25 8.03 5.56 9.07 14.03
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 Juni 2009 s.d 2007 (Dalam Persentase) Pos-pos I. Permodalan 1. CAR dengan memperhitungkan risiko kredi t 2. CAR dengan memperhitungkan risiko pasa r 3. Aktiva tetap terhadap modal II. Kualitas Aktiva 1. Aktiva produktif bermasalah 2. PPA Produktif terhadap Aktiva Produktif 3. Pemenuhan PPA produktif 4. Pemenuhan PPA non produktif 5. NPL gross 6. NPL net III. Rentabilitas 1. ROA 2. ROE 3. NIM 4. BOPO IV. Likuiditas LDR V. Kepatuhan (Compliance) 1.a. Persentase Pelanggaran BMPK a.1. Pihak terkait 65.6 74.26 71.17 6.2 28.24 6.19 65.29 4.26 24.23 7.84 68.65 6.25 33.86 8.67 62.69 9.23 1.4 8.14 2.05 4.65 3.87 4.93 131.39 3.81 3.73 103.14 2.53 3.44 113.87 30.76 29.04 9.01 22.24 20.06 12.41 25.17 20.33 11.88 06-2009 06-2008 06-2007
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a.2. Pihak tidak terkait 1.b. Persentase Pelampauan BMPK b.1. Pihak terkait b.2. Pihak tidak terkait 2. GWM Rupiah 3. PDN 5.02 9.16 9.03 13.2 9.24 11.04
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 Maret 2009 s.d 2007 (Dalam Persentase) Pos-pos I. Permodalan 1. CAR dengan memperhitungkan risiko kredi t 2. CAR dengan memperhitungkan risiko pasa r 3. Aktiva tetap terhadap modal II. Kualitas Aktiva 1. Aktiva produktif bermasalah 2. PPA Produktif terhadap Aktiva Produktif 3. Pemenuhan PPA produktif 4. Pemenuhan PPA non produktif 5. NPL gross 6. NPL net III. Rentabilitas 1. ROA 2. ROE 3. NIM 4. BOPO IV. Likuiditas LDR 72.36 73.6 81.43 6.37 26.04 6.12 69.65 4.53 25.56 7.95 66.77 5.28 28.56 8.85 65.57 8.89 2.05 7.33 .99 4.75 3.96 4.86 133.98 3.24 3.77 106.49 2.57 3.64 115.96 29.42 28.11 8.72 25.68 22.19 11.52 24.52 18.7 12.01 032009 03-2008 032007
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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 3. PDN 5.04 5.6 9.05 5.58 8.04 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
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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, 32 | Capital Adequacy Ratio
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". 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 Londonbased 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
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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 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
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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.
Daftar Pustaka Kesehatan Bank.2011 . [online](http://septianadc.blogspot.com/2011/04/analisiskesehatan-bank-menurut-rasio_17.html?zx=31f95ef37b82f1a0, diakses 10 November 2011) Bank Risk.cfm of America, Financial Report. 2011. [online]
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, diakses 10 November 2011) Citi Bank. 2011, [online]
(http://www.citibank.co.jp/en/aboutus/companyoverview/index.html , diakses 10 November 2011) JP Morgan Chase. 2011. [online]
(http://www.jpmorganchase.com/corporate/Home/home.htm , diakses 10 November 2011)
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