Capital Structure
Capital Strategy
HBOS’ approach is to treat capital as a scarce resource. We take the view that capital is owned by the shareholders and we accept our task is to deploy it to achieve sustainable returns.
Click here to find out more about our Strategy.
Capital Structure
The table below provides details of our capital structure on a Basel I basis as at 31 December 2007.
Capital issuance details are available on our Debt Investor pages.
| Capital Structure Basel I | As at 31.12.2007 £m |
As at 31.12.2006 £m |
|---|---|---|
| Risk Weighted Assets | ||
| Banking book - on balance sheet | 301,173 | 253,839 |
| Banking book - off balance sheet | 19,692 | 14,272 |
| Trading book | 9,973 | 7,901 |
| Total Risk Weighted Assets | 330,838 | 276,012 |
| Capital Resources | ||
| Core Tier 1 | ||
| Ordinary share capital | 933 | 941 |
| Eligible reserves | 20,166 | 18,496 |
| Minority interests (equity) | 123 | 1,058 |
| Perpetual non-cumulative preference shares | ||
| Preference share capital | 2,781 | 2,422 |
| Innovative Tier 1 | ||
| Preferred securities | 3,247 | 3,189 |
| Deductions from Tier 1 | ||
| Goodwill & other intangible assets | (2,862) | (3,677) |
| Total Tier 1 capital | 24,388 | 22,429 |
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| Upper Tier 2 | ||
| Available for sale reserve | 187 | 168 |
| Undated subordinated debt | 5,591 | 5,598 |
| Collectively assessed impairment provisions | 2,671 | 2,711 |
| Lower Tier 2 | ||
| Dated subordinated debt | 9,900 | 7,914 |
| Total Tier 2 capital | 18,349 | 16,391 |
| Supervisory deductions: | ||
| Unconsolidated investments - life | (4,596) | (4,260) |
| Unconsolidated investments - other | (506) | (510) |
| Investments in other banks and other deductions | (983) | (896) |
| Total supervisory deductions | (6,085) | (5,666) |
| Total Capital Resources | 36,652 | 33,154 |
| Tier 1 capital ratio (%) | 7.4 | 8.1 |
| Total capital ratio (%) | 11.1 | 12.0 |
The table below provides details of our capital structure on a Basel II basis as at 1 January 2008.
| Capital Structure Basel II | As at 01.01.2008 £m |
|
|---|---|---|
| Risk Weighted Assets | 309,173 | |
| Capital Resources | ||
| Core Tier 1 | ||
| Ordinary share capital | 933 | |
| Eligible reserves | 20,421 | |
| Minority interests | 123 | |
| Perpetual non-cumulative preference shares | ||
| Preference share capital | 2,781 | |
| Innovative Tier 1 | ||
| Preferred securities | 3,247 | |
| Deductions from Tier 1 | ||
| Goodwill & other intangible assets | (2,862) | |
| Excess expected loss | (875) | |
| Securitisation deductions | (11) | |
| Total Tier 1 capital | 23,757 | |
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| Upper Tier 2 | ||
| Available for sale reserve | 187 | |
| Undated subordinated debt | 5,591 | |
| Collectively assessed impairment provisions | 463 | |
| Lower Tier 2 | ||
| Dated subordinated debt | 9,900 | |
| Deductions from Tier 2 | ||
| Excess expected loss | (875) | |
| Securitisation deductions | (11) | |
| Total Tier 2 capital | 15,255 | |
| Supervisory deductions: | ||
| Unconsolidated investments - life | (4,596) | |
| Unconsolidated investments - other | (506) | |
| Other deductions | (52) | |
| Total supervisory deductions | (5,154) | |
| Total Capital Resources | 33,858 | |
| Tier 1 capital ratio (%) | 7.7 | |
| Total capital ratio (%) | 11.0 | |
| Tier 1 gearing (%) | 25.4 |
