SECURE TRUST BANK PLC Secure Trust Bank PLC
Pillar 3 disclosures for the year ended 31 December 2022
Registered Office
Secure Trust Bank Plc
One Arleston Way, Solihull, B90 4LH
Registered number: 00541132
LEI: 213800CXIBLC2TMIGI76
Secure Trust Bank PLC | Pillar 3 Disclosures for the year ended 31 December 2022 |
Contents
3. | Overview of risk weighted exposure amounts | 6 |
4. | Risk management objectives and policies | 7 |
5. | Remuneration policy | 15 |
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Secure Trust Bank PLC | Pillar 3 Disclosures for the year ended 31 December 2022 |
1. Overview
1.1 Background
This document sets out the Pillar 3 disclosures for Secure Trust Bank PLC and its subsidiaries (the 'Group') as at 31 December 2022. Pillar 3 disclosures promote market discipline and consistency through a set of prescribed requirements set out within the UK Capital Requirements Regulation ('CRR') which require the Group to publicly disclose details of key capital positions, risk exposures, risk assessment processes and remuneration arrangements.
1.2 Regulatory framework
Basel III consists of the UK CRR and the Capital Requirements Directive ('CRD'). On departure of the UK from the European Union ('EU') the CRD was retained in UK law. In October 2021 the Prudential Regulatory Authority ('PRA') published its final rules for implementing the remaining Basel III standards into the UK prudential regulatory framework, the UK CRR, PS22/21 'Implementation of Basel standards: Final rules', effective from 1 January 2022. The UK CRR is currently split across the PRA Rulebook and primary legislation.
The introduction of the UK CRR impacted a number of regulatory requirements applicable to the Group, in particular those relating to Pillar 3. As a result, the required level of disclosure has significantly reduced at the year end, although half year disclosures became mandatory.
1.3 Basis of disclosures
The disclosures have been prepared for the Group in accordance with the UK CRR rules laid out in the Disclosure Part of the PRA Rulebook and the Group's approved policy, which ensures compliance with regulatory requirements and describes the internal controls and processes that support preparation of this document.
The Group has assessed itself as 'small and non-complex' based on the criteria prescribed in the UK CRR (Article 4(145)), thus complying with the requirements incorporated in the PRA Rulebook under Article 433b.
The disclosures cover all applicable Pillar 3 qualitative and quantitative disclosure requirements and, where appropriate, supplementary information and cross referencing has been added for the purposes of enhancing the readability and understandability of these disclosures.
The disclosures portray the Group's risk profile, no material disclosures have been omitted and no information excluded on the grounds of proprietary or confidentiality.
Regulatory capital ratios are calculated on both a Group and an Individual Consolidated (or 'solo') basis.
The Group has permission to include all Group entities within the Individual Consolidation with the exception of AppToPay Ltd, which was newly acquired in May 2022 and has immaterial assets, liabilities and reserves. A request to include AppToPay has been made in the Group's last triennial application to the PRA in early 2023.
The basis of consolidation for the Group is the same for accounting and prudential purposes.
1.4 Content of Report and Frequency
The Pillar 3 disclosures are issued every six months at the same time as the Group's Interim Report or Annual Report and Accounts. Where there is a material change in any approach used for the calculation of capital, the business structure or regulatory requirements, the frequency of disclosure will be reviewed.
Note the comparative figures are as published in the prior period where applicable and, where disclosures are new, the Group has not restated or provided prior period comparatives. Furthermore, where specific rows and columns in the tables prescribed by the PRA are not applicable, these are omitted.
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Secure Trust Bank PLC | Pillar 3 Disclosures for the year ended 31 December 2022 |
1.5 Media and location
Pillar 3 disclosures are published on the Secure Trust Bank PLC corporate website (www.securetrustbank.com/investors).
1.6 Verification
The disclosure guidance within the PRA Rulebook requires creation of a formal Pillar 3 disclosures reporting policy and the Board has put this policy in place. The policy is reviewed and approved on an annual basis by the Risk Committee (a sub-committee of the Board).
The Annual Pillar 3 disclosures are subject to review by the Risk Committee and approval by Board in conjunction with the Group's Annual Report and Accounts.
The Chief Financial Officer attests that the disclosures have been prepared in accordance with the approved Pillar 3 disclosures policy which conforms with the Disclosure part of the PRA Rulebook, which includes revised disclosure requirements applicable from 1 January 2022. The Group has operated a framework of disclosure controls, procedures and governance throughout the period, in order to ensure the completeness and accuracy of the Group's Pillar 3 disclosures.
The disclosures have not been, and are not required to be, subject to independent external audit and do not constitute any part of the Group's Interim Report or Annual Report and Accounts.
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Secure Trust Bank PLC | Pillar 3 Disclosures for the year ended 31 December 2022 |
2 Key metrics
The table below UK KM1 presents key metrics in relation to capital, leverage, and liquidity and funding:
1
2
3
31 Dec 20221 | 30 Jun 20221 | 31 Dec 20211/2 | |
£million | £million | £million | |
Available own funds (amounts) 3 | |||
Common Equity Tier 1 (CET 1) capital | 327.4 | 313.8 | 303.6 |
Tier 1 capital | 327.4 | 313.8 | 303.6 |
Total capital | 377.3 | 363.6 | 350.6 |
Risk weighted exposure amounts3 |
4 | Total risk-weighted exposure amount | 2,335.0 | 2,237.1 | 2,087.4 | ||
Capital ratios (as a percentage of risk-weighted exposure amount)3 | ||||||
5 | Common Equity Tier 1 ratio (%) | 14.0% | 14.0% | 14.5% | ||
6 | Tier 1 ratio (%) | 14.0% | 14.0% | 14.5% | ||
7 | Total capital ratio (%) | 16.2% | 16.3% | 16.8% | ||
Additional own funds requirements based on SREP (as a percentage of | ||||||
risk-weighted exposure amount) 4 | ||||||
UK 7a | Additional CET1 SREP requirements (%) | 0.6% | 0.6% | 0.6% | ||
UK 7b | Additional AT1 SREP requirements (%) | 0.2% | 0.2% | 0.2% | ||
UK 7c | Additional T2 SREP requirements (%) | 0.3% | 0.3% | 0.3% | ||
UK 7d | Total SREP own funds requirements (%) | 9.0% | 9.0% | 9.0% | ||
Combined buffer requirement (as a percentage of risk-weighted | ||||||
exposure amount) | ||||||
8 | Capital conservation buffer (%) | 2.5% | 2.5% | 2.5% | ||
9 | Institution specific countercyclical capital buffer (%)5 | 1.0% | 0.0% | 0.0% | ||
11 | Combined buffer requirement (%) | 3.5% | 2.5% | 2.5% | ||
UK | Overall capital requirements (%) | 12.5% | 12.0% | 12.0% | ||
11a | ||||||
CET1 available after meeting the total SREP own funds requirements | ||||||
12 | (%)6 | 8.95% | 8.96% | 9.48% | ||
Leverage ratio | ||||||
13 | Total exposure measure excluding claims on central banks | 3,049.9 | 2,949.8 | |||
14 | Leverage ratio excluding claims on central banks (%) | 10.7% | 10.6% | |||
Liquidity Coverage Ratio7 | ||||||
15 | Total high-quality liquid assets (HQLA) (Weighted value -average) | 283.6 | 248.0 | |||
UK | Cash outflows - Total weighted value | 298.3 | 244.5 | |||
16a | ||||||
UK | Cash inflows - Total weighted value | 187.3 | 180.5 | |||
16b | ||||||
16 | Total net cash outflows (adjusted value) | 112.6 | 71.4 | |||
17 | Liquidity coverage ratio (%) | 270.1% | 363.0% | |||
Net Stable Funding Ratio8 | ||||||
18 | Total available stable funding | 2,820.5 | ||||
19 | Total required stable funding | 1,846.3 | ||||
20 | NSFR ratio (%) | 152.8% |
1 Ratios and figures requiring disclosure for the first time under new PS22/21 guidance from 1 January 2022 do not include comparatives.
2 Ratios and figures quoted are based on rules applicable prior to 1 January 2022 (CRR regulation no 575/2013).
3 The capital and risk weighted exposure values presented are net of IFRS 9 transitional relief as set out in Article 473a of the UK CRR. Transitional relief permits phasing of the IFRS 9 accounting implementation over a 5-year period. IFRS 9 transitionary relief applicable on 31 December 2022, 25% (2021: 50%) for all exposures up to June 2020, following which COVID-19 transitional relief of 75% (2021:100%) is applicable.
4 Group has changed its interpretation of rows UK 7a-c, it now reflects the allocation of additional capital requirements to each tier of capital; prior period restated to align. 5 The UK Countercyclical Capital Buffer rate increased from 0% to 1% on 13 December 2022. On 5 July 2022, the Financial Policy Committee ('FPC') announced a further increase to 2% effective from 5 July 2023.
6 Row 12 comparatives have been restated to represent, as a percentage, the level of CET1 capital surplus after subtracting the minimum amount of CET1 capital required to meet the total SREP own funds requirements. The minimum CET1 requirement is equivalent to 56.25% of Pillar 1 and 2A.
7 Liquidity balances are calculated as the simple averages of month-end results from 31 January 2022 to 31 December 2022.
8 Measures calculated based on a simple average of the March, June, September and December 2022 quarter end positions.
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Disclaimer
Secure Trust Bank plc published this content on 31 March 2023 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 31 March 2023 16:27:09 UTC.
