AFD - 2019 Universal registration document

RISK MANAGEMENT

Basel III Pillar 3

Capital requirements for operational risk AFD’s average net banking income (NBI) for the last three financial years is €756M. The capital requirement for operational risk is €113M (15% of average NBI).

2018

In thousands of euros

2019

GDP - Smoothed 3-year average

756,286

723,136

Capital requirement ratio

15%

15%

Capital requirement

113,443

108,470

4.2.4.4 Risk on equities and other financial instruments

Capital requirements for this category of risk equalled €232M based on a risk-weighted amount of €2,902M. 4.2.4.5 Interest rate risk in the banking portfolio The Paragraph Ǿ 6.2.5.3 on “Interest rate risk” describes this type of risk in detail. 4.2.4.6 Information on encumbered and unencumbered assets An asset is considered to be “encumbered”, or may be used contractually for the purpose of guaranteeing, acting as collateral for or enhancing a transaction from which it is inseparable. On the other hand, an “unencumbered” asset is one free of any restrictions of a legal, regulatory, contractual or any other nature, and free from the possibility of being liquidated, sold, transferred or assigned. AFD does not record any assets as encumbered apart from securities sold under repurchase agreements to the Banque de France for a nominal amount of €64.5M.

The methods for valuing and recording equity investments held by the Group are presented in Paragraph Ǿ 6.2.3.2 of the financial statements and in the following notes thereto: Note Ǿ 1 (Financial assets and liabilities at fair value through profit and loss) and Note Ǿ 3 (Financial assets at fair value through equity) (Paragraph Ǿ 6.2.4.1). The accounting standards for equity- accounted equity investments are outlined in Paragraph Ǿ 6.2.3.1.2 “Accounting principles and methods”. The summary table of equity investment exposure is provided in Paragraph Ǿ 4.2.4.1.1.2. The amount of capital gains (losses) realised on disposals and liquidations during the period under review is presented in Notes Ǿ 13 and 14 to the consolidated financial statements (Paragraph Ǿ 6.2.4.2). Realised gains and losses are recorded as gains or losses on assets at fair value through P&L (Note Ǿ 13) or at fair value through equity (Note Ǿ 14).

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UNIVERSAL REGISTRATION DOCUMENT 2019