Geschäftsbericht 2015, englisch

münchener Hypothekenbank eg | annual report 2015 management report 30 3 percent for the total exposure of a bank in relation to its equity capital. Currently it cannot be ruled out that the Leverage Ratio will be applied differently for different business models at the Euro- pean level and that the low-risk matchingly refinanced mortgage business will be treated differently than high-risk investments. Low- risk areas of business can only generate appropriate yields if the required level of underlying equity capital is kept at a correspond- ingly low level that reflects the risks involved. In contrast, inappro- priately high levels of required equity capital make it necessary to accept higher risks in order to generate sufficient yields for the equity capital providers. For this reason we believe that our con- servative business model will be disproportionately penalised by a non-risk weighted leverage ratio. In view of the Leverage Ratio discussions at the international level that favour its introduction it does, however, appear necessary for us to make preparations to begin observing the Leverage Ratio in 2018. We have included con- sideration of equity capital measures needed to obtain a 3 percent ratio in our plans. Furthermore, we are also attentively following the current discus- sions and publications of various authorities regarding regulatory requirements. It is difficult to comprehensively prepare to meet future requirements at this time as varying positions are still reg- ularly held by the different institutions involved in the current dis- cussions at national, European and international levels. For this reason we will continue to prepare to the greatest extent possible, although we will wait until the final version of the individual rules have been approved before we begin to implement them. As the example of LCR showed, significant changes can still occur during the proceedings. We believe it is necessary for the regulators to pro- vide an appropriate amount of time for implementation purposes. New subject areas related to the implementation of Basel III were, and are being, monitored by a central department within MünchenerHyp and implemented by the affected divisions in various projects. Up until today all of the known aspects have been implemented on time. The enormous variety of require- ments mandated by the supervisory authority does, however, pose major challenges to a bank of our size and leads to signifi- cant costs. Single Supervisory System for EU Banks At the end of 2014 the ECB took over the direct supervision of about 120 banks it categorised as significant in the eurozone, in- cluding MünchenerHyp. The ECB installed ongoing supervisory measures in all of the banks it supervised and in 2015 also con- ducted its Supervisory Review and Evaluation Process (SREP) for the first time. The SREP carefully examines a bank’s business model, its internal governance, as well as its available capital and liquidity. The results are presented as a score, which can result in additional requirements for the bank’s equity capital and liquidity if needed. The results of the SREP for MünchenerHyp revealed a minimum required ratio of 9.25 percent for the Bank’s common equity Tier 1 capital. As our common equity Tier 1 capital ratio is 17.3 percent we exceeded this requirement by a very significant margin. In the future this evaluation will take place annually as MünchenerHyp belongs to the so-called first category of banks under direct supervision of the ECB. Minimum Requirements for Risk Management (MaRisk) No changes have been made to the MaRisk since 15 December 2012. The long-discussed amendment was not passed in 2015. As a result, no changes had to be made to the Bank’s proven processes. Recovery plan In September 2015 MünchenerHyp was requested by the ECB to prepare and submit a recovery plan within three months. We sub- mitted the requested recovery plan in December and the necessary internal processes were installed to ensure the continuous updating of the plan.

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