Published: 2020-02-21 07:02:00 CET
LHV Group
Company Announcement

Outcome of Supervisory Review and Evaluation Process by the FSA and AS LHV Group’s internal capital targets

In the middle of January, the Estonian FSA, Finantsinspektsioon, presented LHV Group with the outcome of Supervisory Review and Evaluation Process (SREP) capital adequacy calculation. In comparison with earlier there are some changes in composition of additional own funds and in required targets.

According to the decision of the FSA, an additional requirement for own funds in the amount 1.73% applies to LHV Group (compared to 1.53% in the 2018 SREP), of which at least 0.42% (0.39% in 2018) must be covered by Core Tier 1 own funds and at least 0.56% (0.52% in 2018) by Tier 1 capital. In addition, an added capital requirement of 0.2% on deposits taken in from foreign financial institutions remained in place.

In a council meeting on 19 February, the Supervisory Board of LHV Group based on the FSA decision and adding to it internal buffers decided to set total CAD target ratio at 16.00% (previously 15.50%), Tier 1 ratio at 12.46% (previously 12.10%) and Core Tier 1 ratio to 10.63% (previously 10.40%).

Underneath is the target split into components:

 Core Tier 1Tier 1Total CAD
Base requirement4.50%6.00%8.00%
Pillar 2 capital requirement0.42%0.56%1.73%
Non-resident financial intermediaries’ deposits according to Financial plan0.10%0.10%0.10%
Total SREP requirement5.02%6.66%9.83%
Capital conservation buffer2.50%2.50%2.50%
Systemic importance buffer (O-SII)1.00%1.00%1.00%
Systemic risk buffer1.00%1.00%1.00%
Discretionary counter-cyclical buffer0.00%0.00%0.00%
Total combined buffer4.50%4.50%4.50%
Total minimal regulatory requirement9.52%11.16%14.33%
Additional internally decided buffers1.11%1.30%1.67%
Group’s internal capitalization targets10.63%12.46%16.00%

Priit Rum
Communication Manager
Phone: +372 502 0786