US-Swiss tax programme The uS Department of Justice (the DOJ) and the Swiss Federal Department of Finance announced on 29 August 2013 a programme (the Programme) for Swiss banks to obtain resolution concerning their status in connection with ongoing investigations by the DOJ into individuals and entities that use foreign (i.e. non-u.S.) bank accounts to evade u.S. taxes and reporting requirements, and individuals and entities that facilitate or have facilitated the evasion of such taxes and reporting requirements. Swiss banks that choose to participate have to notify the DOJ of their election to categorise their relevant banking operations according to one of a number of defined categories under the Programme. The Group, which carried out private banking operations in Switzerland prior to disposing of these operations in november 2013, has notified the DOJ of its elected categorisation on the basis that while it believes it has operated in full compliance with all uS federal tax laws, there remains the possibility that certain of its clients may not have declared their assets in compliance with such laws. The Group will continue to co-operate with the DOJ under the terms of the Programme. However, at this time, it is not possible to predict the ultimate outcome of the Group’s participation in the Programme, including the timing and scale of any fine finally payable to the DOJ.
Forward asset purchases and forward deposits placed 440 546 undrawn formal standby facilities, credit lines and other commitments to lend: less than 1 year original maturity: Mortgage offers made 9,559 7,404
Items in the course of collection from banks – – – – – 1,007 – 1,007
Trading and other financial assets at fair value through profit or loss – 37,350 105,333 – – – – 142,683
Available-for-sale financial assets – – – 43,976 – – – 43,976
Deposits from banks – – – – – 13,982 – 13,982
Cash and balances at central banks – – – – – 80,298 – 80,298
Derivative financial instruments 11,571 44,986 – – – – – 56,557 loans and receivables: loans and advances to banks – – – – 32,757 – – 32,757 loans and advances to customers – – – – 517,225 – – 517,225
Available-for-sale financial assets – – – 31,374 – – – 31,374
Trading and other financial liabilities at fair value through profit or loss – 27,692 5,700 – – – – 33,392
Derivative financial instruments 6,598 42,078 – – – – – 48,676 notes in circulation – – – – – 1,198 – 1,198
In 2010, government securities with a fair value of £3,601 million were reclassified from available-for-sale financial assets to held-to-maturity investments reflecting the Group’s then positive intent and ability to hold them until maturity.
From available-for-sale financial assets to loans and receivables – – 162 203 217 219 313 340 394 422 454 402
From held-to-maturity investments to available-for-sale financial assets 1,117 1,117 4,998 4,998 – – – – – – – –
Total carrying value and fair value 1,117 1,117 5,171 5,210 3,908 4,121 4,518 4,606 2,227 2,244 3,337 3,328
no financial assets have been reclassified in accordance with paragraphs 50B, 50D or 50e of IAS 39 since 2008; the following disclosures relate to those assets which were so reclassified in 2008.
2013 £m 2012 £m 2011 £m 2010 £m 2009 £m 2008 £m
From available-for-sale financial assets to loans and receivables (56) 24 (68) 69 161 (108)
Debt securities in issue 87,102 90,803 117,253 122,847 liabilities arising from non-participating investment contracts 27,590 27,590 54,372 54,372
level 1 level 1 fair value measurements are those derived from unadjusted quoted prices in active markets for identical assets or liabilities. Products classified as level 1 predominantly comprise equity shares, treasury bills and other government securities.
level 2 level 2 valuations are those where quoted market prices are not available, for example where the instrument is traded in a market that is not considered to be active or valuation techniques are used to determine fair value and where these techniques use inputs that are based significantly on observable market data. examples of such financial instruments include most over-the-counter derivatives, financial institution issued securities, certificates of deposit and certain asset-backed securities.
Bank and building society certificates of deposit – 1,491 – 1,491
Trading liabilities: liabilities in respect of securities sold under repurchase agreements – 28,902 – 28,902
Total financial liabilities carried at fair value 6,592 66,472 1,075 74,139
Total financial assets carried at fair value 142,713 99,607 6,231 248,551
Total financial liabilities carried at fair value 1,901 79,624 591 82,116
unlisted equity investments and investments in property partnerships held in the life assurance funds are valued using third party valuations. Management take account of any pertinent information, such as recent transactions and information received on particular investments, to adjust the third party valuations where necessary.
£m £m £m £m exchange and other adjustments 10 (60) 12 (38)
losses recognised in other comprehensive income within the revaluation reserve in respect of available-for-sale financial assets – (58) – (58)
Gains recognised in the income statement within other income 296 – 144 440
Gains recognised in other comprehensive income within the revaluation reserve in respect of available-for-sale financial assets – 40 – 40
Gains recognised in the income statement, within other income, relating to the change in fair value of those assets held at 31 December 2013 70 5 159 234
The table below analyses movements in the level 3 financial liabilities portfolio.
Trading and other financial liabilities at fair value through profit or loss Derivative liabilities Financial guarantees
Transfers into the level 3 portfolio – 16 – 16 exchange and other adjustments – 8 – 8 losses (gains) recognised in the income statement within other income 10 (30) 3 (17)
Sensitivity of level 3 valuations At 31 December 2013 At 31 December 20125
Derivative financial assets embedded equity conversion feature lead manager or broker quote equity conversion feature spread (199 bps/420 bps)
– uncollateralised inflation swaps are valued using appropriate discount spreads for such transactions. These spreads are not generally observable for longer maturities. The reasonably possible alternative valuations reflect flexing of the spreads for the differing maturities to alternative values of between 62 bps and 192 bps (2012: 51 bps and 260 bps).
– in line with International Private equity and Venture Capital Guidelines, the values of underlying investments in fund investments portfolios.
The fair values of debt securities, which were previously within assets held for trading and were reclassified to loans and receivables, are determined predominantly from lead manager quotes and, where these are not available, by alternative techniques including reference to credit spreads on similar assets with the same obligor, market standard consensus pricing services, broker quotes and other research data.
Market Credit Default Swap (CDS) spreads are used to develop the probability of default for quoted counterparties. For unquoted counterparties, internal credit ratings and market sector CDS curves and recovery rates are used. The loss Given Default (lGD) is based on market recovery rates and internal credit assessments.
The combination of a one notch deterioration in the credit rating of derivative counterparties and a ten per cent increase in lGD increases the CVA by £67 million. Current market value is used to estimate the projected exposure for products not supported by the model, which are principally complex interest rate options that are traded in very low volumes. For these, the CVA is calculated on an add-on basis (in total contributing £5 million of the overall CVA balance at 31 December 2013).
At 31 December 2013, the own credit adjustment arising from the fair valuation of £5,267 million (2012: £5,700 million) of the Group’s debt securities in issue designated at fair value through profit or loss resulted in a gain of £40 million (2012: loss of £437 million).
A. Transferred financial assets that continue to be recognised in full The Group enters into repurchase and securities lending transactions in the normal course of business that do not result in derecognition of the financial assets covered as substantially all of the risks and rewards, including credit, interest rate, prepayment and other price risks are retained by the Group. In all cases, the transferee has the right to sell or repledge the assets concerned.
As set out in note 21, included within loans and receivables are loans transferred under the Group’s securitisation and covered bond programmes. As the Group retains all of a majority of the risks and rewards associated with these loans, including credit, interest rate, prepayment and liquidity risk, they remain on the Group’s balance sheet. Assets transferred into the Group’s securitisation and covered bond programmes are not available to be used by the Group whilst the assets are within the programmes. However, the Group retains the right to remove loans from the covered bond programmes where they are in excess of the programme’s requirements. In addition, where the Group has retained some of the notes issued by securitisation and covered bond programmes, the Group has the ability to sell or pledge these retained notes.
(iv) LIBOR/Overnight Index Swap basis The Group’s derivative trading business applies £50 million (31 December 2012: £74 million) of valuation adjustments against the changing market approach to valuing derivatives that are subject to daily collateral margin, where standard market practice is to pay interest on an Overnight Index Swap basis rather than a lIBOR rate.
Debt securities shown in the table above are notes held in non-controlled securitisation vehicles representing the Group’s ongoing involvement in financial assets transferred into those securitisation vehicles in prior years. The debt securities, which benefit from significant credit enhancement, are classified as available-for-sale financial assets and are managed on a similar basis to the Group’s other non-traded asset-backed securities.
Derivative financial instruments 50,285 (17,160) 33,125 loans and receivables: loans and advances to banks¹ 25,182 – 25,182 loans and advances to customers¹ 495,161 – 495,161
Related amounts where set off in the balance sheet not permitted4
Trading and other financial assets at fair value through profit or loss¹ 113,395 (903) – 112,492 loans and receivables: loans and advances to banks¹ 25,182 – – 25,182 loans and advances to customers¹ 495,161 (10,958) (49) 484,154
At 31 December 2012 net amounts presented in the balance sheet £m
The primary risks affecting the Group through its use of financial instruments are: credit risk; market risk, which includes interest rate risk and foreign exchange risk; liquidity risk; capital risk; and insurance risk. Information about the Group’s exposure to each of the above risks and capital can be found on pages 123 to 196. The following additional disclosures, which provide quantitative information about the risks within financial instruments held or issued by the Group, should be read in conjunction with that earlier information.
The Group establishes two types of hedge accounting relationships for interest rate risk: fair value hedges and cash flow hedges. The Group is exposed to fair value interest rate risk on its fixed rate customer loans, its fixed rate customer deposits and the majority of its subordinated debt, and to cash flow interest rate risk on its variable rate loans and deposits together with its floating rate subordinated debt.
The Group hedges part of the currency translation risk of the net investment in certain foreign operations using currency borrowings. At 31 December 2013 the aggregate principal of these currency borrowings was £1,695 million (2012: £2,489 million). In 2013, an ineffectiveness gain of £16 million before tax and £12 million after tax (2012: ineffectiveness loss of £1 million before and after tax) was recognised in the income statement arising from net investment hedges.
Total structural foreign currency exposures, after net investment hedges 225 (19)
See note 52 – Contingent liabilities and commitments for further information.
Impaired – no provision required – 637 1,284 1,824 3,745 –
Allowance for impairment losses on loans and advances to customers 11,966 15,250
Total loans and advances which are neither past due nor impaired 25,219 318,668 36,789 110,093 465,550 29,443
Asset-backed securities: Corporate and other debt securities 150 25 – – – 232 407
Debt securities, treasury and other bills held at fair value through profit or loss An analysis of the Group’s trading and other financial assets at fair value through profit or loss is included in note 17. The credit quality of the Group’s debt securities, treasury and other bills held at fair value through profit or loss is set out below: AAA £m
Corporate and other debt securities 489 168 843 386 29 14 1,929
Total debt securities held as trading assets 4,575 1,260 1,570 403 47 14 7,869
Treasury bills and other bills 6 55 – – – – 61
Asset-backed securities: Corporate and other debt securities 383 2,619 7,462 5,886 617 1,724 18,691
Treasury bills and other bills 54 – – – – – 54
Total debt securities held at fair value through profit or loss 19,592 5,212 9,591 8,526 2,911 1,906 47,738
There were reverse repurchase agreements which are accounted for as collateralised loans within loans and advances to banks with a carrying value of £183 million (2012: £662 million), against which the Group held collateral with a fair value of £183 million (2012: £662 million), all of which the Group is able to repledge.
At 31 December 2013 70 per cent to 80 per cent 64,954 2,296 970 68,220 80 per cent to 90 per cent 46,581 2,224 1,080 49,885 90 per cent to 100 per cent 24,592 1,720 1,027 27,339
Derivative assets, after offsetting of amounts under master netting arrangements The Group reduces exposure to credit risk by using master netting agreements and by obtaining collateral in the form of cash or highly liquid securities. In respect of the net derivative assets after offsetting of amounts under master netting arrangements of £13,646 million (2012: £18,399 million), cash collateral of £3,188 million (2012: £5,429 million) was held.
The fair value of collateral pledged in respect of repurchase transactions, accounted for as secured borrowings, where the secured party is permitted by contract or custom to repledge was £37,999 million (2012: £48,077 million). In addition, the following financial assets on the balance sheet have been pledged as collateral as part of securities lending transactions: Assets pledged 2013 £m 2012 £m
The Group assesses whether a loan benefitting from a uK Government sponsored programme is impaired using the same accounting policies and practices as it does for loans not benefitting from such a programme. There is no direct impact on the impairment status of a loan benefitting from the Mortgage Rescue schemes, as these schemes involve the purchase, and eventual sale, of the property. The loans included within the Income Support for Mortgage Interest scheme may be impaired, in accordance with the normal definition of impairment.
The Group classifies a retail account as forborne at the time a customer in financial difficulty is granted a concession. Accounts are classified as forborne only for the period of time which the exposure is known to be, or may still be, in financial difficulty. Where temporary forbearance is granted, exit criteria are applied to include accounts until they are known to no longer be in financial difficulty. Details of the exit criteria are shown in the analysis below. Where the treatment involves a permanent change to the contractual basis of the customer’s account such as a capitalisation of arrears or term extension, the Group classifies the balance as forborne for a period of 24 months, after which no distinction is made between these accounts and others where no change has been made.
Impairment provisions as % of loans and advances which are currently or recently forborne 2013 £m £m £m £m
Includes capitalisation of arrears and term extensions which commenced during the previous 24 months and remaining as customers at the year end.
Permanent treatments within last 12 months 196 272 174 232 50.0 44.5 £398 million of current and recent forborne loans and advances were not impaired at 31 December 2013 (31 December 2012: £408 million).
Includes customers who had an arrangement to pay less than the contractual amount at 31 December or where an arrangement ended within the previous three months.
The Group recognises that forbearance alone is not necessarily an indicator of impaired status but is a trigger for the review of the customer’s credit profile. The Group grants forbearance when it believes that there is a realistic prospect of the customer continuing to be able to repay all facilities in full. If there is any concern over future cash flows and the Group incurring a loss, then forborne loans will be classified as impaired in accordance with the Group’s impairment policy.
Recovery can sometimes be through improvement in market or economic conditions, or the customer may benefit from access to alternative sources of liquidity such as an equity injection. These can be especially relevant in real estate or other asset backed transactions where a fire sale of assets in a weak market may be unattractive.
– non-payment contractual terms (for example covenant amendments or waivers) where the modifications enable default to be avoided.
Forbearance identification and classification The Group’s policy is to treat all impaired assets in Commercial Banking as having been granted some form of forbearance. Impaired loans and advances exist only in Business Support; Global non Core; and, for smaller SMe customers, Customer Support. unimpaired forborne loans and advances exist in the good book, in Business Support and in Global non Core.
All reviews performed in the good book, Business Support or Global non Core include analysis of latest financial information, a consideration of the market and sector the customer operates in, performance against plan and revised terms and conditions granted as part of the forbearance concession.
Currently, the exception to this 12 month minimum period is where a permanent structural cure is made (for example, this could be an injection of new collateral security or partial repayment of debt to restore an lTV back to within the covenant). In this case, the customer may be removed from the forbearance category once the permanent cure has been made.
Impairment provisions as % of loans and advances which are forborne
Up to 1 month £m £m £m £m £m £m £m
Available-for-sale financial assets 139 642 26 390 142 1,933 2,932 37,772 43,976
Trading and other financial assets at fair value through profit or loss 7,949 9,813 2,710 1,386 1,383 1,748 5,368 130,263 160,620 loans and advances to banks 18,167 6,513 2,830 389 455 437 3,291 675 32,757 loans and advances to customers 44,781 8,718 9,850 9,328 11,874 27,393 64,428 340,853 517,225
Derivative financial liabilities: Gross settled derivatives – net flows 305 453 244 1,040 1,533 3,575
The principal amount for undated subordinated liabilities with no redemption option is included within the over five years column; interest of approximately £85 million (2012: £79 million) per annum which is payable in respect of those instruments for as long as they remain in issue is not included beyond five years.
Further information on the Group’s liquidity exposures is provided on pages 171 to 177.
Capital risk Capital risk is defined as the risk that the Group has a sub-optimal amount or quality of capital or that capital is inefficiently deployed across the Group.
Insurance risk Insurance risk is the risk of reductions in earnings, capital and/or value, through financial or reputational loss, due to fluctuations in the timing, frequency and severity of insured/underwritten events and to fluctuations in the timing and amount of claim settlements. This includes fluctuations in profits due to customer behaviour.
Change in derivative financial instruments, trading and other liabilities at fair value through profit or loss (6,258) 1,497 14,249
Foreign exchange impact on balance sheet3 89 (219) 302 liability management losses (gains) within other income4 80 (59) (599)
(Profit) loss on disposal of businesses (362) 7 21 net gain on sale of available-for-sale financial assets (629) (3,547) (343)
Payments in respect of payment protection insurance provision (2,674) (3,299) (1,045)
(E) Acquisition of group undertakings and businesses £m £m £m net cash outflow arising from acquisitions of and additional investment in joint ventures in the year (6) (11) (10)
Profit attributable to non-controlling interests 84 – – 84 loss attributable to equity shareholders (1,427) – (44) (1,471)
Consolidated statement of comprehensive income – year ended 31 December 2012
Income statement transfers in respect of disposals (3,547) – – (3,547)
Income statement transfers in respect of impairment 42 – – 42
Total comprehensive income attributable to equity shareholders (2,343) – (1,689) (4,032)
Cash and cash equivalents at beginning of year 85,889 – – 85,889
Cash and cash equivalents at end of year 101,058 – – 101,058
Items in course of collection from banks 1,256 – – 1,256
Items in course of transmission to banks 996 – – 996
Share premium account 16,872 – – 16,872 non-controlling interests 685 – – 685
Other comprehensive income for the year, net of tax 2,242 469 2,711
Proceeds from sale and maturity of financial assets 36,523 – 36,523
Cash and cash equivalents at beginning of year 62,300 – 62,300
Items in course of collection from banks 1,368 – – 1,368
loans and advances to banks 30,272 – – 30,272 loans and advances to customers 592,597 – – 592,597
Inserts application guidance to address inconsistencies identified in applying the offsetting criteria used in the standard. Some gross settlement systems may qualify for offsetting where they exhibit certain characteristics akin to net settlement. This amendment is not expected to have a significant impact on the Group.
Total equity 37,717 37,810 non-current liabilities: Debt securities in issue 8 535 545
Value of employee services: Share option schemes – – – 143 143
Value of employee services: Share option schemes – – – 69 69
Net cash provided by (used in) operating activities 3,835 1,040 3,109
Note 3: Amounts due from subsidiaries These comprise short-term lending to subsidiaries, repayable on demand. The fair values of amounts owed by subsidiaries are equal to their carrying amounts. no provisions have been recognised in respect of amounts owed by subsidiaries.
Note 4: Share capital and share premium Details of the Company’s share capital and share premium account are as set out in notes 45 and 46 to the consolidated financial statements.
Undated subordinated liabilities 6.0884% undated Subordinated notes callable 2015 (£732 million) – 668 6.369% undated Subordinated notes callable 2015 (£597 million) – 551 5.92% undated Subordinated notes callable 2015 (uS$378 million) – 200 6.267% undated Subordinated notes callable 2016 (uS$466 million) – 237 6.3673% undated Subordinated notes callable 2019 (£331 million) – 296 6.475% undated Subordinated notes callable 2024 (£102 million) – 88 6% undated Subordinated Step-up Guaranteed Bonds callable 2032 (£500 million) b 10 10 6.413% undated Subordinated notes callable 2035 (uS$375 million) – 172 6.657% undated Subordinated notes callable 2037 (uS$316 million) – 143
Note 9: Related party transactions In January 2009 HM Treasury became a related party of the Company and has remained so during 2012 and 2013. From 1 January 2011, in accordance with IAS 24, uK Government-controlled entities also became related parties of the Group. Further information on the relationship and transactions with HM Treasury and uK Government-controlled entities is given in note 51 to the consolidated financial statements.
The principal subsidiaries, all of which have prepared accounts to 31 December and whose results are included in the consolidated accounts of lloyds Banking Group plc, are: Share class
A further notional principal amount of £600 million and a net positive fair value of £13 million (2012: notional principal amount of £600 million and a net positive fair value of £14 million) of this amount were designated as cash flow hedges.
Financial assets: Cash and cash equivalents – – – 511 511
Derivative financial instruments 240 1,212 – – 1,452 loans to subsidiaries – – 11,043 – 11,043
Derivative financial instruments 272 1,421 – – 1,693 loans to subsidiaries – – 8,123 – 8,123
Comparatives have not been provided as this disclosure was not required in 2012.
Sensitivity of level 3 valuations Effect of reasonably possible alternative assumptions2
Derivative financial assets embedded equity conversion feature lead manager or broker quote equity conversion feature spread (199 bps/420 bps) 1,212 59 (58)
For the year ended 2013 ranges are shown where appropriate and represent the highest and lowest inputs used in the level 3 valuations. For the year ended 2012 ranges are not shown as these were not required in 2012.
Telephone lines are open 8.30 am to 5.30 pm, Monday to Friday. Calls to 0871 numbers are charged at 8p per minute plus network extras. Calls from outside the united Kingdom are charged at applicable international rates. The call prices quoted were correct at February 2014.
Individual Savings Accounts (ISAs) There are a number of options for investing in lloyds Banking Group shares through an ISA. For details of services and products provided by the Group please contact: Bank of Scotland Share Dealing, Halifax Share Dealing or lloyds Bank Direct Investments using the contact details overleaf.
For details contact: BnY Mellon Depositary Receipts, PO Box 30170, College Station, TX 77842-3170. Telephone: 1-866-259-0336 (uS toll free), international callers: +1 201-680-6825. Alternatively visit www.adrbnymellon.com or email shrrelations@cpushareownerservices.com
www.lloydsbankinggroup.com www.lloydsbankinggroup.com www.shareview.co.uk help.shareview.co.uk www.bankofscotlandsharedealing.co.uk www.halifaxsharedealing.co.uk www.lloydsbank.com/shares www.lloydsbankinggroup.com www.adrbnymellon.com www.fca.org.uk www.actionfraud.org.uk
examples of such forward looking statements include, but are not limited to: projections or expectations of the Group’s future financial position including profit attributable to shareholders, provisions, economic profit, dividends, capital structure, expenditures or any other financial items or ratios; statements of plans, objectives or goals of the Group or its management including in respect of certain synergy targets; statements about the future business and economic environments in the united Kingdom (uK) and elsewhere including, but not limited to, future trends in interest rates, foreign exchange rates, credit and equity market levels and demographic developments; statements about competition, regulation, disposals and consolidation or technological developments in the financial services industry; and statements of assumptions underlying such statements.
An embedded equity conversion feature is a derivative contained within the terms and conditions of a debt instrument that enables or requires the instrument to be converted into equity under a particular set of circumstances. The Group’s enhanced Capital notes (eCns) contain such a feature whereby these notes convert to ordinary shares in the event that the consolidated core tier 1 ratio of the Group falls below 5 per cent.
Home loans A loan to purchase a residential property which is then used as collateral to guarantee repayment of the loan. The borrower gives the lender a lien against the property, and the lender can foreclose on the property if the borrower does not repay the loan per the agreed terms.
Interest rate risk Interest rate risk in arises from the different repricing characteristics of the Group’s non-trading assets, liabilities and off-balance sheet positions of the Group. Interest rate risk arises predominantly from the mismatch between interest rate sensitive assets and liabilities, but also to the investment term of capital and reserves, and the need to minimise income volatility.
Leverage ratio Tier 1 capital divided by the exposure measure. Basel III reforms introduced a leverage ratio framework designed to reinforce risk based capital requirements with a simple, transparent, non-risk based ‘backstop’ measure.
Loan-to-value ratio (LTV) The loan-to-value ratio is a mathematical calculation which expresses the amount of a mortgage balance outstanding as a percentage of the total appraised value of the property. A high lTV indicates that there is less value to protect the lender against house price falls or increases in the loan if repayments are not made and interest is added to the outstanding balance of the loan.
Loss Given Default The estimated loss that will arise if a customer defaults. It is calculated after taking account of credit risk mitigation and includes the cost of recovery.
Operational risk The risk of loss resulting from inadequate or failed internal processes, people and systems or from external events.
Renegotiated loans loans and advances are generally renegotiated either as part of an ongoing customer relationship or in response to an adverse change in the circumstances of the borrower. In the latter case renegotiation can result in an extension of the due date of payment or repayment plans under which the Group offers a concessionary rate of interest to genuinely distressed borrowers. This will result in the asset continuing to be overdue and will be impaired where the renegotiated payments of interest and principal will not recover the original carrying amount of the asset. In other cases, renegotiation will lead to a new agreement, which is treated as a new loan.
Tier 2 capital A component of regulatory capital defined by the PRA, mainly comprising qualifying subordinated loan capital, certain non-controlling interests and eligible collective impairment allowances. Further details are given in the Capital Risk section on page 178.
Accounting policies 215, 219 notes to the consolidated financial statements 255
Critical accounting estimates and judgements 224 notes to the consolidated financial statements 240
General Commentary 1 Present all related risk information together or provide an index or an aid to navigation. 123 2 Define the bank’s risk terminology and risk measures and present key parameter values used. 124-196 3 Describe and discuss top and emerging risks. 42-43, 126 4 Outline plans to meet each new key regulatory ratio. 172, 179, 185-186