Annual report 2006 - Dexia.com

RAPPORT DE GESTION
CONSOLIDATED
FINANCIAL STATEMENTS
COMPTES SOCIAUX
capital requirement is 8% of this RWA equivalent, i.e. the
market risk capital requirement is multiplied by 12.5.
As from January 1, 2005, Dexia is publishing its financial
statements under IFRSs as adopted by the EU. The CBFA has
required calculating the ratio based on IFRS amounts, with
the main following adjustments applicable for Dexia:
• AFS reserves on bonds and cash flow hedge reserves are
not part of equity;
• AFS reserves on shares are added to Tier 2 equity if positive,
with a haircut, or deducted from Tier 1 equity if negative;
• some IFRS adjustments on subordinated debts, minority
interests and debts must be reversed to reflect the characteristics
of absorption of loss of those instruments;
• other elements (SPV, deferred taxes, etc) are also adjusted
based on CBFA requirements.
Moreover, as from January 1, 2007, according to the CRD
regulation (Capital Requirement Directive), the CBFA will
adapt its definition of the regulatory capital. The most important
point which could impact Dexia is the elements which
are currently deducted from the total regulatory capital
(banks accounted for by the equity method, participations in
financial companies or subordinated loans issued by such a
financial company) that will be deducted for 50 % from Tier
1 capital and for 50 % from total regulatory capital. For these
elements dealing with insurance companies, the new deduction
rule will be implemented as from 2012.
However, about the solvency ratio publication, Dexia will use
the flexibility allowed by the Directive and the CBFA in the
way that the publication obligations (pillar III) are not applied
when the bank has just begun to use the new methods of calculation
(Basel II). Hence, to ensure continuity in the applied
method, Dexia will use this option in 2007 and will continue
to publish its ratios based on the former rule, which allows
deducting participations from total regulatory capital.
As from January 1, 2008, Dexia will calculate its capital adequacy
according to Basel II regulation and its regulatory capital
will be calculated consequently.
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Dexia / Annual Report 2006