ourexpertise - Crédit Agricole CIB

32010 MANAGEMENT REPORT• CAPITAL, CAPITAL REQUIREMENTS ANDADEQUACY OF CAPITALComposition of capital and ratiosCapital is split into three categories: Tier I capital, Tier II capitaland Tier III capital, according to the following criteria:- own shares, measured at book value;- intangible assets, including start-up costs and goodwill.• solidity and stability;• maturity;• subordination.• Tier I capitalTier I capital includes:Core capital and deductions• Capital;• Reserves, including revaluation adjustments and unrealised ordeferred capital gains/losses;• Unrealised gains or losses on available-for-sale fi nancial assetsare recognised directly in shareholders’ equity and adjusted asfollows:- for equity instruments, net unrealised capital gains are deductedfrom Tier I capital, currency by currency, net of any taxalready deducted in the accounts, and 45% of the amountis released, currency by currency, before tax to Tier II capital.Unrealised net capital losses are not adjusted ;- unrealised gains or losses recognised directly in equity capital,as a result of a cash fl ow hedging transaction, are neutralised;- for other fi nancial instruments, including debt instruments,loans and advances, unrealised capital gains and losses areneutralised;- impairment losses on all available-for-sale assets taken toprofi t and loss are not adjusted;• Share premiums;• Retained earnings.• Net income from the current year, i.e. net income; Group shareminus projected dividend payments;• Funds that the Autorité de Contrôle Prudentiel has deemed tomeet the conditions for inclusion in Tier I capital;• Deductions are as follows:• Other Tier I capital• Minority interests include minorities’ shares in entities owned byCrédit Agricole CIB;• Hybrid securities similar to minority interests.• Hybrid securitiesThese include equity instruments, either innovative or non-innovative.Innovative equity instruments feature progressive remuneration.Hybrid instruments in accordance with the eligibility criteria defi -ned in the press release of the Basel Committee dated 27 October1998, are included in Tier I capital, subject to the prior agreementof the Secretary-General of the French Prudential Supervisory Authority.They are composed of deeply subordinated notes issuedin accordance with the requirements of Article L.228-97 of theCode de Commerce, as amended by the fi nancial security act of1 August 2003. They also include preferred securities governedby the Anglo-Saxon law.Hybrid instruments have to comply with certain limits relative toTier I capital calculated before the deductions set out below in thethird bullet point:• innovative hybrid instruments, instruments with a strong incentivefor repayment mostly via a step-up, are limited to 15% ofthe Tier I Capital, subject to the prior agreement of the Secretary-Generalof the French Prudential Supervisory Authority if theymet the eligibility criteria of Tier I capital.• all the hybrid instruments, the innovative and non-innovativeones, are limited to 35% of Tier I capital.Furthermore, the total of hybrid instruments, minority interestsand aforementioned preferred shares cannot stand for more than50% of Tier I capital.Preferred securities governed by the Anglo-SaxonlawA description of those securities is provided in note 6.14 of theconsolidated fi nancial statements at 31 December 2010.Deeply subordinated notes issued in accordance with the requirements of Article L.228-97 of the Code deCommerce, as amended by the financial security act of 1 August 2003IssuerDate ofissueAmount ofissue(in localcurrency units)CurrencyDatesofbuy-backoptionCompensationInnovative issue(I) /non-innovativeissue (NI)Prudential amountat 31.12.2010(€ million)Crédit Agricole CIB 19.03.2004 500 USD 19.03.2014 5.81% NI 377Crédit Agricole CIB 04.05.2004 1,260 USD 04.05.2014 4.92%+104bps I 950Crédit Agricole CIB 04.05.2004 470 USD 04.05.2014 6.48% NI 354Crédit Agricole CIB 21.12.2005 85 USD 01.01.2016 Libor12M+150bps NI 64Crédit Agricole CIB 21.12.2005 220 USD 01.01.2016 Libor12M+90bps I 166Crédit Agricole CIB 28.09.2007 1,000 USD 28.09.2017 Libor12M+252bps NI 754Crédit Agricole CIB 28.09.2007 590 EUR 28.09.2019 Euribor12M+190bps I 590Newedge 23.12.2008 103 USD 23.03.2014 8.60% NI 77Crédit Agricole CIB 24.12.2008 1,700 USD 24.12.2013 Libor3M+710bps NI 1,281124SHELF-REGISTRATION DOCUMENT CRÉDIT AGRICOLE CIB 2010