Achmea Hypotheekbank N.V. annual report 2011

Achmea Hypotheekbank’s policy is to maintain a strong capital base to maintain investor, creditor and market confidence
and to sustain future development of the business. The trade off between risk and return is part of the overall risk appetite
framework of the bank.
Under the Dutch Financial Supervision Act (Wft), banks are required to maintain a minimum capital ratio (BIS ratio) of 8%.
The Executive Board set the internally applied target for the capital minimum level at 12%. Achmea Hypotheekbank complies
with external and internal minimum requirements throughout the year with a Core Tier 1 ratio of 11.7% and a BIS ratio of 12.6%
at year-end 2011.
Qualifying capital and risk weighted assets
Core tier 1 capital
In 2011, core tier 1 capital decreased by EUR 26 million from EUR 507 million to EUR 481 million, mainly due to the negative
2011 result. Lower direct capital deductions of EUR 5 million (2010: EUR 21 million) had a positive effect on core tier 1 capital in
2011. Since Achmea Hypotheekbank does not hold any hybrid tier 1 instruments, tier 1 capital equals its core tier 1 capital.
Tier 2 capital
Qualifying lower tier 2 capital (subordinated loans) is decreased with EUR 75 million compared with 2010 to EUR 43 million,
mainly as a result of:
• The bank redeemed a EUR 60 million subordinated loan (maturity 2016) in November 2011, resulting in a EUR 60 million
decrease in qualifying lower tier 2 capital.
• Subordinated loans are assigned a lower weighting as they approach maturity, which results in a EUR 15 million lower
contribution to the qualifying capital.
Risk weighted assets
In view of the new Basel III guidelines and the new securitisation reporting guidelines by De Nederlandsche Bank (DNB)
(‘Regeling securitisaties’), Achmea Hypotheekbank currently reports its exposure arising from securitisation positions within
its risk-weighted assets instead of directly deducting these from its tier 1 and tier 2 capital. This direct deduction from its tier
1 and tier 2 capital led to a decrease from tier 1 and tier 2 capital of EUR 28 million and an increase in risk-weighted assets
of EUR 297 million. Therefore the total risk-weighted assets increased slightly from EUR 4,0 billion (year-end 2010) to EUR 4,1
billion (year-end 2011), even though Achmea Hypotheekbank reduced its risk exposure further in 2011 by reducing its mortgage
portfolio. The deductions consist of the reserve accounts.
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