This post will summarize the information previously given for the Big 6 Canadian Banks: RY, BNS, BMO, TD, CM, & NA
| Capital Structure October, 2007 |
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| RY | BNS | BMO | TD | CM | NA | |
| Total Tier 1 Capital | 23,383 | 20,225 | 16,994 | 15,645 | 12,379 | 4,442 |
| Common Shareholders’ Equity | 95.2% | 81.5% | 83.8% | 131.5% | 90.1% | 95.0% |
| Preferred Shares | 10.0% | 8.1% | 8.5% | 6.2% | 23.7% | 9.0% |
| Innovative Tier 1 Capital Instruments | 14.9% | 13.6% | 14.3% | 11.1% | 0% | 11.4% |
| Non-Controlling Interests in Subsidiaries | 0.1% | 2.5% | 0.2% | 0.1% | 1.1% | 0.4% |
| Goodwill | -20.3% | -5.6% | -6.7% | -49.0% | -14.9% | -15.8% |
Some readers might be interested in comparing these figures to CitiBank’s 3Q07 Report: Tier 1 Capital was – after all the horrid writedowns, and before the $7.5-billion infusion – $92,370-million (USD). Total Tier 1 Capital for the Canadian Big 6 is $93,068-million (CAD). Citibank has no perpetual preferreds outstanding. They do have something in Tier 1 Capital called “Qualify mandatorily redeemable securities of subsidiary trusts” – frankly, I don’t know what those are.
| Tier 1 Issuance Capacity October 2007 |
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| RY | BNS | BMO | TD | CM | NA | ||
| Equity Capital | (A) | 17,545 | 15,840 | 13,126 | 12,931 | 9,448 | 3,534 |
| Non-Equity Tier 1 Limit | (B=A/3) | 5,848 | 5,280 | 4,375 | 4,310 | 3,149 | 1,178 |
| Innovative Tier 1 Capital | (C) | 3,494 | 2,750 | 2,422 | 1,740 | 0 | 508 |
| Preferred Limit | (D=B-C) | 2,354 | 2,530 | 1,953 | 2,570 | 3,149 | 670 |
| Preferred Y/E Actual | (E) | 2,344 | 1,635 | 1,446 | 974+250 | 2,931 | 400 |
| New Issuance Capacity | (F=D-E) | 10 | 895 | 507 | 1,346 | 218 | 270 |
It seems unlikely that we’ll see any RY issuance this year, but any of the others appear to be able to top things up, if conditions are right.
We can now show the all important Risk-Weighted Asset Ratios!
|
Risk-Weighted Asset Ratios |
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| Note | RY | BNS | BMO | TD | CM | NA | |
| Equity Capital | A | 17,545 | 15,840 | 13,126 | 12,931 | 9,448 | 3,534 |
| Risk-Weighted Assets | B | 247,635 | 218,300 | 178,687 | 152,519 | 127,424 | 49,336 |
| Equity/RWA | C=A/B | 7.09% | 7.3% | 7.35% | 8.48% | 7.41% | 7.16% |
| Tier 1 Ratio | D | 9.4% | 9.3% | 9.51% | 10.3% | 9.7% | 9.0% |
| Capital Ratio | E | 11.5% | 10.5% | 11.74% | 13.0% | 13.9% | 12.4% |
TD’s figure needs to be taken with a grain of salt; their takeover of Commerce Bancorp is expected to reduce Tier 1 Capital to the 8.75%-9.00% range; presumably with a similar effect on the Equity Ratio and Total Capital Ratio.
Otherwise, it is interesting to note that CM has the best protected Preferreds (with “protection” defined solely in terms of the regulatory risk-weighted-assets and capital that is junior to preferreds) while RY has the least protected.
And again, for those interested, Citibank had (at the third quarter 2007) a Tier 1 Ratio of 7.32% and a Total Capital Ratio of 10.61%. It should be noted that regulatory ratios are not directly comparable between regulators, as the regulators have a certain amount of discretion in applying the internationally agreed guidelines.