Sberbank - Annual Report 2010 - 38 Capital Adequacy Ratio

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# 38 Capital Adequacy Ratio

The Group's objectives when managing capital are (i) to comply with the regulatory capital requirements set by the Bank of Russia and (ii) to safeguard the Group's ability to continue as a going concern. The Group also monitors capital adequacy ratio based on Basel Accord to make sure it maintains a level of at least 8%.

Under the current capital requirements set by the Bank of Russia banks have to maintain a ratio of regulatory capital to risk weighted assets ("statutory capital ratio") above a prescribed minimum level. According to requirements set by the Bank of Russia statutory capital ratio has to be maintained above the minimum level of 10%. The Bank's Assets and Liabilities Management Committee (ALMC) sets the minimum level of the capital ratio of 11%. This level exceeds both the minimum level set by the Bank of Russia (10%) and Basel Committee (8%) and allows the Bank to participate in the State deposit insurance scheme, which was introduced by the Federal Law №177-FZ "Guarantees on Bank Deposits of Individuals in the Russian Federation" dated 23 December 2003. As at 31 December 2010 the regulatory capital adequacy ratio was 17.7% (2009:21.5%). Compliance with capital adequacy ratios set by the Bank of Russia is monitored monthly with reports outlining the calculation. Regulatory capital based on the Bank's reports prepared under Russian accounting standards totalled RR 1 241 876 million as of 31 December 2010 (2009: RR 1 317 771 million).

As at 31 December 2010 and 31 December 2009, Capital Adequacy Ratios calculated by the Group in accordance with the International Convergence of Capital Measurement and Capital Standards (July 1988, updated to November 2005) and Amendment to the Capital Accord to incorporate market risks (updated November 2005), commonly known as Basel1 requirements, were as follows:

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In millions of Russian Roubles | 2010 | 2009
--- | --- | ---
Tier 1 capital |  |
Share capital | 87,742 | 87,742
Share premium | 232,553 | 232,553
Retained earnings | 585,819 | 403,934
Less goodwill | (8,251) | (469)
Total Tier 1 capital | 897,863 | 723,760
Tier 2 capital |  |
Revaluation reserve for premises | 53,648 | 55,540
Fair value reserve for investment securities available for sale | 13,437 | (329)
Foreign currency translation reserve | (1,136) | (1,009)
Subordinated capital | 303,513 | 362,115
Less investments in associates | (2,479) | (31)
Total Tier 2 capital | 366,983 | 416,286
Total capital | 1,264,846 | 1,140,046
Risk weighted assets (RWA) |  |
Credit risk | 7,327,090 | 6,005,088
Market risk | 199,883 | 298,725
Total risk weighted assets (RWA) | 7,526,973 | 6,303,813
Core capital adequacy ratio (Total Tier 1 capital to Total RWA) | 11.9% | 11.5%
Total capital adequacy ratio (Total capital to Total RWA) | 16.8% | 18.1%

In millions of Russian Roubles | 2010 | 2009
--- | --- | ---
Tier 1 capital |  |
Share capital | 87,742 | 87,742
Share premium | 232,553 | 232,553
Retained earnings | 585,819 | 403,934
Less goodwill | (8,251) | (469)
Total Tier 1 capital | 897,863 | 723,760
Tier 2 capital |  |
Revaluation reserve for premises | 53,648 | 55,540
Fair value reserve for investment securities available for sale | 13,437 | (329)
Foreign currency translation reserve | (1,136) | (1,009)
Subordinated capital | 303,513 | 362,115
Less investments in associates | (2,479) | (31)
Total Tier 2 capital | 366,983 | 416,286
Total capital | 1,264,846 | 1,140,046
Risk weighted assets (RWA) |  |
Credit risk | 7,327,090 | 6,005,088
Market risk | 199,883 | 298,725
Total risk weighted assets (RWA) | 7,526,973 | 6,303,813
Core capital adequacy ratio (Total Tier 1 capital to Total RWA) | 11.9% | 11.5%
Total capital adequacy ratio (Total capital to Total RWA) | 16.8% | 18.1%

## History

- 38 Capital Adequacy Ratio
- Key Figures in Accordance with IFRS
- Recommend Page
- Price of Sberbank’s Ordinary Shares
- Voting Shareholder Structure

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