To be resilient in an economic storm, a bank needs three things – low risk assets, strong capital and surplus deposits. ABG has all three. At end-2019, 55% of loans were in the private bank (significantly secured on sub-60% LTV residential properties) or the acquired mortgage book. Just 1.5% of the commercial loan book was on 80%+ LTV. The equity-to-assets ratio was 8% and total capital ratio, 17.3%. The regulators have reduced capital buffers – we estimate ABG has ca.£60m of surplus capital. There is surplus liquidity: deposits £2.1bn, loans £1.6bn. ABG announced an increased dividend but withdrew it following PRA market guidance.
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