2020 Universal registration document and annual financial report - BNP PARIBAS316
5 risks and CaPital adequaCy Pillar 3
5
Capital management and capital adequacy
➤ TABLE 13: TRANSITION FROM CONSOLIDATED EQUITY TO COMMON EQUITY TIER 1 (CET1) CAPITAL
In millions of euros 31 December 2020(*) 31 December 2019(**)
Consolidated equity 117,215 111,721
Undated Super Subordinated Notes ineligible in CET1 (9,948) (8,689)
Proposed distribution(***) (3,307) (3,871)
Ineligible minority interests (2,735) (2,527)
Changes in the fair value of hedging instruments recognised directly in equity (1,440) (1,072)
Additional value adjustments linked to prudent valuation requirements (1,399) (1,396)
Goodwill and other intangible assets (10,039) (11,380)
Net deferred tax assets arising from tax loss carry-forwards (385) (430)
Negative amounts resulting from the calculation of expected losses (333) (551)
Other prudential adjustments 1,138 (599)
COMMON EQUITY TIER 1 (CET1) CAPITAL 88,767 81,204
(*) In accordance with the transitional arrangements on the introduction of the IFRS 9 accounting standard (article 473a of Regulation (EU) No. 2017/2395 and Regulation (EU) No. 2020/873).
(**) Data as at 31 December 2019 take into account in deduction of regulatory capital the dividend distribution initially anticipated in relation to 2019 income, eventually retained in reserves in 2020.
(***) In 2020, the proposed distribution includes the proposed dividend distribution equivalent to 21% of 2020 net income (subject to the approval of the Annual General Meeting of 18 May 2021) and the intended additional restitution of 29% of 2020 net income (for EUR 1.9 billion) subject to the required agreements.
Additional Tier 1 capital
Additional Tier 1 capital is mainly composed of subordinated debt instruments with the following characteristics:
■ they are perpetual and include no redemption incentive;
■ they are not held by the bank, its subsidiaries or any company in which the Group holds 20% or more of the capital;
■ they have a capacity to absorb losses;
■ they may include a buy back option, five years after the issue date at the earliest, exercisable at the issuer s discretion(1);
■ remuneration arises from distributable elements that may be cancelled, with no requirements for the bank.
This category is also composed of non-eligible minority reserves in common equity within their limit of eligibility.
Authorisations to redeem Additional Tier 1 own capital instruments are deducted from this category.
Tier 2 capital
Tier 2 capital is comprised of subordinated debt with no buy back incentive, as well as non-eligible minority reserves in Tier 1 capital within their limit of eligibility. A prudential discount is applied to the subordinated debt with less than five years of residual maturity.
Prudential deductions from Tier 2 capital primarily concern:
■ Tier 2 capital components in significant financial entities;
■ Tier 2 own capital instrument buy back authorisations.
(1) Subject to authorisation by the supervisor.
