If ultimately the Bank disagrees with the Minister’s determination of the appropriate dividend, the Bank is required to publish its recommendation. In 2014, the Bank introduced a new Note to its financial accounts setting out the Bank’s approach to determining required capital, its dividend recommendation, and the basis of calculating the recommended dividend.
The Bank’s capital adequacy framework5 evaluates credit, market and operational risks associated with the Bank’s balance sheet, investment policy, and operations. It considers possible correlations between these risks, and establishes the necessary capital to meet the possible loss associated with each of these risks, given its risk likelihood (see Figure 4).