Republic Bank Limited
130
For the year ended September 30, 2015. Expressed in thousands of Trinidad and Tobago dollars ($’000) except where otherwise stated
Notes to theConsolidatedFinancial Statements
4
Financial
21 RISK MANAGEMENT
(continued)
21.5 Operational risk
The growing sophistication of the banking industry has made the Group’s operational risk profile more complex. Operational
risk is inherent within all business activities and is the potential for financial or reputational loss arising from inadequate or failed
internal controls, operational processes or the systems that support them. It includes errors, omissions, disasters and deliberate
acts such as fraud.
The Group recognises that such risk can never be entirely eliminated and manages the risk through a combination of systems
and procedures to monitor and document transactions. The Group’s operational risk department oversees this and where
appropriate, risk is transferred by the placement of adequate insurance coverage.
The Group has developed contingency arrangements and established facilities to support operations in the event of disasters.
Independent checks on operational risk issues are also undertaken by the internal audit function.
22 CAPITAL MANAGEMENT
The Group’s policy is to diversify its sources of capital, to allocate capital within the Group efficiently and to maintain a prudent
relationship between capital resources and the risk of its underlying business. Equity increased by $668 million to $9.41 billion during
the year under review.
Capital adequacy is monitored by each member of the Group, employing techniques based on the guidelines developed by the Basel
Committee on Banking Regulations and Supervisory Practice (the Basel Committee), as implemented by the respective Central Banks
for supervisory purposes. The Basel risk-based capital guidelines require a minimum ratio of core capital (Tier 1) to risk-weighted assets
of 4%, with a minimum total qualifying capital (Tier 2) ratio of 8%. Core capital (Tier 1) comprises mainly shareholders’ equity.
Capital adequacy ratio
2015
2014
Republic Bank Limited
21.72%
25.77%
Republic Finance and Merchant Bank Limited
130.21%
133.32%
Republic Bank (Cayman) Limited
26.74%
20.83%
Republic Bank (Grenada) Limited
15.60%
15.80%
Republic Bank (Guyana) Limited
22.85%
22.16%
Republic Bank (Barbados) Limited
19.78%
16.02%
Republic Bank (Suriname) N.V.
15.37%
–
HFC Bank (Ghana) Limited
14.20%
–
Atlantic Financial Limited
52.73%
67.95%
At September 30, 2015 the Bank and each of its banking subsidiaries exceeded the minimum levels required for adequately capitalised
institutions.
