Coventry makes accounting error

Michael Lloyd

December 12, 2019

Coventry Building Society has made an accounting error and overstated its capital ratios.

When updating the models used to calculate its risk weighted assets, the society noticed a mistake in its calculation.

Coventry corrected its calculation of risk weighted assets.

This lowers its Common Equity Tier 1 ratio by 1.6% to 32.6%.

A statement from the society said: “During the process of transitioning models, the Society has identified an omission in connection with its historic calculation of its RWAs.

“Specifically, the necessary 6% scalar was not applied to the core IRB model outputs.

“The core IRB models themselves are not impacted.

“Application of the 6% scalar would have increased total RWAs by 4.6%, resulting in the 1.6% reduction in the CET1 ratio as at 30 June 2019.

“The society maintains a simple and low risk business model and expects that its CET1 ratio will continue to be one of the highest reported in the UK, reflecting a considerable capital surplus above regulatory requirements.”

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