Stress test confirms KAS BANK’s low risk profile

  • Tier-1 ratio of 20.7% in the most adverse scenario, more than triple the minimum level of 6.0%
  • Sovereign debt exposure is limited to Germany and the Netherlands
  • 95% of the investment portfolio consists of investments with a Aaa to Aa3 credit rating

Albert Röell, chairman of the KAS BANK Managing Board: "KAS BANK focuses exclusively on wholesale securities services. Therefore the bank has an inherently low risk profile, combined with stable operational results over several years and a consistent return. The outcome of the stress test confirms KAS BANK’s low risk profile, our strong and transparent balance sheet and the high quality of our investment portfolio. Our solid financial position corresponds with our A- long-term and A-2 short-term ratings that Standard & Poor’s reaffirmed in 2010.”

Methodology
The stress test was undertaken on a voluntary basis, according to the scenarios, methodology and principles of the Committee of European Banking Supervisors (CEBS). The stress test is independent of KAS BANK’s regular risk management procedures and internal stress scenarios.

The stress test was performed by KAS BANK’s Finance and Risk Management departments based on a number of common assumptions (such as a consistent balance sheet) and potential scenarios defined by CEBS and therefore should not be used for the purposes of comparison. The results should not be construed as forecasts. Different assumptions of other stress tests can and will result in different outcomes.

Results
In the stress test’s adverse scenario including additional sovereign shock, KAS BANK’s Tier-1 ratio (BIS ratio) amounted to 20.7% (year-end 2009: 21.6%), exceeding the minimum level of 6.0% set by CEBS by more than 14%. KAS BANK’s Tier-1 capital consists purely of equity. As has been stated previously, KAS BANK does not have any exposure to countries experiencing heightened sovereign risk. Sovereign debt exposure is limited to the Netherlands and Germany. Finally, 95% of KAS BANK’s investment portfolio consists of investments with a Aaa to Aa3 credit rating (Moody’s Investor Services).

The test underlines KAS BANK’s solid financial position. The low risk profile corresponds with the bank’s special position as a specialist in securities services – custody, clearing and investment administration – for professional investors and financial institutions.

Annexes
Please find here a detailed summary of the results of the stress test, including an overview of the investment portfolio categorised by credit rating.

Managing Board, KAS BANK N.V.
3 August 2010