(Jamaica) Limited - FirstCaribbean International Bank

notes to the Financial Statements
Year Ended 31 October 2009
(Expressed in Jamaican dollars unless otherwise indicated)
16. Share Capital and Reserves
The Group and The Bank
2009 2008
no. of
no of
shares
shares
(000) (000)
Share Capital
Authorised –
Ordinary shares 300,000 300,000
The Group and The Bank
Issued and fully paid – 2009 2008
$’000 $’000
265,756,730 Ordinary stock units 1,396,667 1,396,667
Objectives, policies and procedures
Capital strength provides protection for depositors and creditors, allows the Bank to undertake profitable business
opportunities as they arise and helps maintain favourable credit ratings.
The Bank’s objective is to employ a strong and efficient capital base. It manages capital in accordance with policies
established by the Board. These policies relate to capital strength, capital mix, dividends and return of capital, and the
unconsolidated capital adequacy of regulated entities. Each policy has associated guidelines, and capital is monitored
continuously for compliance.
Each year a capital plan and three-year outlook are established, which encompass all the associated elements of capital:
forecasts of sources and uses, maturities, redemptions, new issuance, corporate initiatives, and business growth. The
capital plan is stress-tested in various ways to ensure that it is sufficiently robust under all reasonable scenarios. All of the
elements of capital are monitored throughout the year, and the capital plan is adjusted as appropriate.
There were no significant changes made in the objectives, policies and procedures during the year.
Regulatory requirements
The Bank’s regulatory capital requirements are determined in accordance with guidelines issued by the Central Bank of
Jamaica. These guidelines evolve from the framework of risk-based capital standards developed by the Basel Committee,
Bank of International Settlement.
Capital standards require that banks maintain minimum Tier 1 and Total capital ratios of 4% and 8% respectively. The
Central Bank of Jamaica has established that Jamaican deposit-taking financial institutions maintain Tier 1 and Total
capital ratios of 5% and 10%, respectively. During the year, the Bank complied in full with all of its regulatory capital
requirements.
Regulatory capital
Regulatory capital consists of Tier 1 and Tier 2 capital, less certain deductions. Tier 1 Capital is comprised of common
stock, less goodwill and other deductions. Tier 2 Capital principally comprises hybrid capital instruments.
In 2009, Tier 1 and Total Capital ratios were 14.33% and 15.21%, respectively (2008 – 13.61% and 14.75%,
respectively).
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