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Capital Adequacy at European Bancassurers: The Need to Look Beyond Regulatory Ratios Jul 04
Standard & Poors, July 2004
Abstract
Standard & Poor's Ratings Services believes that, in recent years, the investments made by European banks in insurance operations have put increasing pressure on the capital strength and financial flexibility of some of these groups, without such deterioration being adequately reflected in core regulatory capital ratios. In order to evaluate the capital strength of European banks with insurance subsidiaries, Standard & Poor's assesses separately the capital needs of the two different business segments, in addition to analyzing the consolidated financial statements. The purpose of such a 'building block' approach is to avoid the 'double counting' of capital; that is, counting the same capital twice within the same group. Therefore, when computing bank capital ratios, Standard & Poor's deconsolidates insurance assets...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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