Pillar 3

The financial services industry is subject to a supervisory framework reflecting the Basel III rules on capital adequacy, established through the EU Capital Requirements Directive.  The framework consists of three ‘pillars’: 

Pillar 1: This determines the minimum capital requirements of firms to cover credit, market and operational risk, and is made up of a base capital resources requirement, credit and market risk requirements and a fixed overheads requirement.

Pillar 2: This requires firms to analyse the risks to the business and whether these are adequately mitigated through the risk controls adopted by the firm.  Where the firm considers that the risks are not sufficiently mitigated, they need to allocate sufficient capital against those risks.  Stress tests and scenario analyses are conducted to ensure that the risk controls are adequately robust and the allocation of capital is sufficient.

Pillar 3: As a measure of market discipline, the final pillar aims to supplement the first two pillars by requiring firms to publicly disclose information on their capital resources and requirements, risk exposures and risk management framework.

Our Pillar 3 disclosure can be accessed here and are updated annually after the publication of our Annual Reports and the completion of our Internal Capital Adequacy Assessment Process (ICAAP).