WELLS FARGO BANK INTERNATIONAL PILLAR 3 ... Pillar 3 annual disclosure as at 31 December 2015 Risk...

WELLS FARGO BANK INTERNATIONAL

PILLAR 3 DISCLOSURE DOCUMENT

as at 31 December 2015

Introduction

In accordance with Part 8 of Regulation (EU) No 575/2013 (“CRR”), Wells Fargo Bank

International (“WFBI”) hereby sets out for public disclosure certain information hereinafter

referred to as the “Pillar 3 disclosures”.

In accordance with WFBI’s disclosure policy for Pillar 3, these disclosures are currently made on

an annual basis, with a periodic consideration given as to whether more frequent disclosure is

warranted.

Except as otherwise stated, all amounts are expressed in thousands of United States Dollars, and

relate to financial information as at 31 December 2015 and 31 December 2014.

Directive 2013/36/EU (“CRD IV”) was transposed into Irish law via Statutory Instrument 158

of 2014.

3 Pillar 3 annual disclosure as at 31 December 2015

Scope of application

In accordance with Article 13 (2) of the CRR which became effective 1st January 2014, the

disclosures laid out in this document are on a fully consolidated basis.

These disclosures relate to Wells Fargo Bank International, its holding company Wells Fargo

International B.V. and its branches in London and Frankfurt.

Under accounting rules, no consolidation of WFBI’s EU parent financial holding company,

Wells Fargo International B.V. is required. Therefore a difference between prudential balance

sheet and accounting balance sheet does exist. The extent of this difference is shown in the

following table:

Table 1:

For regulatory purposes WFBI reports on a Consolidated and Individual basis only. It does not

report on an amended solo basis.

There is no current or foreseen material practical or legal impediment to the prompt transfer of

own funds or repayment of liabilities between Wells Fargo International B.V. (the parent

undertaking) and WFBI (the subsidiary).

Aggregate amount of capital deficiencies of non-consolidated subsidiaries – there are no non-

consolidated subsidiaries.

Risk Management

WFBI has identified the following material risk categories: credit, market, operational, funding

and liquidity risk. Material risks are defined by the WFBI Board of Directors (“the Board”) as

any risks which affect the attainment of the business objectives of WFBI. This note presents

information about WFBI’s exposure to these risks and WFBI’s policies and process for managing

and measuring these risks in addition to information about the capital planning and

management process. A declaration on the adequacy of risk management arrangements of

WFBI is approved annually by the Board. The Board considers the risk management systems in

place in WFBI to be adequate having regard to the institution’s risk profile and strategy.

WFBI Risk Management framework

The Board has overall responsibility for the business strategy and corporate governance of

WFBI. The Board have two direct sub committees, the Audit Committee and the Risk

Committee to fulfil these responsibilities. The Audit Committee and the Risk Committee are

independent from the Board and an Independent Non-Executive Director chairs each

committee. The Risk Committee meets at least quarterly.

Total Assets 16,140,067 16,118,088 21,979

Total Equity 2,785,405 2,764,034 21,371

As at December 2015

Prudential

(Consolidated)

Accounting

(Individual) Difference


Risk Management (continued)

The Audit Committee’s primary purpose is to represent and provide assistance to the Board in

fulfilling its legal and fiduciary obligations with respect to matters involving the accounting,

auditing, financial reporting and internal control functions of WFBI. The Audit Committee is

responsible for the oversight of regulatory filings and financial disclosure.

The Risk Committee has delegated authority from the Board to oversee and advise the Board on

the risk appetite, strategy, the current financial position of, and the capacity of WFBI to manage

and control risks within the agreed strategy. The Risk Committee is responsible for the

oversight of risk management by implementing guidelines, policies and processes to identify,

monitor, manage, report and mitigate risks within WFBI. The Risk Committee while retaining

the responsibility for the day to day oversight of risk management, draws on two further

committees: the Asset Liability Committee (“ALCO”) and the Credit Committee to fulfil this

responsibility:

The purpose of the ALCO is to derive the most appropriate strategy for the Bank in terms of the mix of assets and liabilities given its expectation of the future and potential consequences of interest rate movements, liquidity constraints, and foreign exchange exposure and capital adequacy;

The purpose of the Credit Committee is for the effective administration and awarding of credit as guided by the Board’s strategy and risk appetite and within the policy, procedures and practices defined in the credit risk policies and all relevant sub-policies.

See below summary of WFBI’s Governance Structure:

WFBI Board of Directors

Risk Committee

Credit Committee

ALCO

Audit Committee


Risk Management (continued)

The ALCO and Credit Committee have formulated policies and procedures for the identification, modification, management, approval, monitoring and mitigation of risk as described in the sections that follow. The Risk Committee will ensure the development and ongoing maintenance of a risk management system and risk appetite within WFBI that is effective and proportionate to the nature, scale and complexity of the risks inherent in the business, consistent with both the Board approved Business Strategy and Risk Appetite Statement (“RAS”).

WFBI’s RAS describes the nature and level of risks that WFBI is willing to take in pursuit of its

strategic and business objectives internationally, as we strive to fulfill our customer’s needs for

financial products and services globally, while ensuring it operates in a safe and sound manner.

WFBI’s RAS is owned by the Board. This statement sets the boundaries which form a dynamic

link between WFBI’s Business Plan and its Risk Management Framework. The RAS defines

WFBI’s risk metrics (see Appendix 1) which are then monitored using inner and outer

boundaries. It also clearly sets out the governance protocols and actions required in the event of

a breach. Adherence to the RAS metrics is monitored closely and reported quarterly to the

Board.

The number of directorships held by members of the management body is outlined in the

following table:

Table 2:

WFBI selects the members of the management body in line with the Wells Fargo group’s

principles and objectives. Wells Fargo uses evaluation tools to ensure that the selection process

identifies the most qualified candidates for the position. These tools must be consistent with the

Uniform Guidelines on Employee Selection Procedures as well as compliant with laws and

regulations regarding hiring procedures.

Non- Non-

Financial Financial Financial Financial

Frank Pizzo Chairman & Group Non-Executive Director - - - 3

Holly Kaczmarczyk Executive Director (CEO) - - - 1

David Weber Group Non-Executive Director - 1 - -

Richard Yorke Group Non-Executive Director 1 - - 1

Raj Bharadwaj Group Non-Executive Director - - - 8

Dominic O’Hagan Group Non-Executive Director - - - -

Louise Li Group Non-Executive Director - - - 3

John McNulty Group Non-Executive Director - - - -

Walter Brazil Independent Non-Executive Director 2 3 - -

Mark Ryan Independent Non-Executive Director - 1 - -Susan Webb Independent Non-Executive Director 2 1 - -

As at

31 December 2015

NON-GROUP GROUP


Own funds

Summary of the terms and conditions of the main features of all capital instruments:

CET 1 capital WFBI is authorised to issue 850,000,000 (2014: 100,000,000)

ordinary shares at a value of $1 each. As of 31 December 2015,

777,950,000 (2014: 26,000,000) fully paid shares were issued to

affiliates within Wells Fargo & Co. (“Wells Fargo”). The holders

of ordinary shares are entitled to receive dividends as declared from

time to time and are entitled to one vote per share at meetings of the

WFBI shareholders. The ordinary shares rank pari passu in all

respects. Capital contributions are repayable only at the option of

WFBI and form part of distributable reserves.

Additional Tier 1 capital WFBI has no additional Tier 1 capital.

Tier 2 capital In April 2015, WFBI converted its subordinated borrowings totalling

$751,950 under the credit facility agreements with its direct parent,

Wells Fargo International B.V. and replaced it with 751,950,000

ordinary shares.

At 31 December 2014, WFBI’s subordinated debt was within 5 years

of maturity and $388,377 of the $751,900 was eligible for

recognition and inclusion in Tier 2 capital. The reduced amount was

due to the amortisation of eligible capital in accordance with capital

adequacy rules.

Table 3:

Subordinated

Debt

Reference

LIBOR Funding date Maturity 2015 2014

Floating Rate

Subordinated 3m Libor 2-Apr-2007 31-Mar-2017 - 514,000

Subordinated 3m Libor 13-Apr-2007 31-Mar-2017 - 223,650

Subordinated 3m Libor 7-Sep-2007 31-Mar-2017 - 14,300

- 751,950Total Subordinated debt


Own funds (continued)

Table 4:

The following table reconciles in full, the CET 1 items, additional Tier 1 items, Tier 2 items and

filters and deductions to own funds and the balance sheet in the audited financial statements of

WFBI:

WFBI has a deferred tax asset dependant on future profitability and is being deducted from

Common Equity Tier 1 capital.

In its Pillar 3 disclosures, WFBI reports ratios using elements of own funds on a prudential

consolidated basis. Ratios published outside of Pillar 3 reporting use elements of own funds on

an individual basis to align with accounting requirements.

Capital requirements

The policy of WFBI is to maintain adequate capital at all times, by considering the nature and scale of its business and the risks inherent in its operations. It does this through an Internal Capital Adequacy Assessment Process (“ICAAP”). The purpose of the ICAAP is to provide the Board with an assessment of WFBI’s risks and the level of capital necessary to hold against these risks having considered mitigating factors. The ICAAP process brings together the business and control functions in assessing the future risk and capital needs of WFBI.

As at 31 December 2015

Regulatory

own funds Note

Reconciling

items

Common Equity Tier 1 items

777,950 -

333,685 1 (18,799)

- 2 131,207

1,506,026 3 (1,472,039)

Less: Adjustments to CET 1 due to prudential filters (30,434) 4 30,434

Capital contribution - 3 1,506,004

Additional Tier 1 capital - -

Tier 2 capital

General credit risk adjustments 62,292 5 177

Total own funds 2,649,519 176,984

Paid up capital instruments - - 777,950

Previous years retained earnings - - 314,886

Financial

statements

Assets

Financial

statements

Liabilities

Financial

statements

Equity

- - -

- - 1,506,004

Year end profit not eligible - - 131,207

Other reserves - - 33,987

- -

62,469 - 2,764,034

62,469 - -

2) WFBI's regulatory capital includes only audited profits.

3) Capital contribution is recorded on its own line in the financial statements but included in other reserves in Regulatory own funds. In addition,

Financial statements equity includes other reserves not eligibile for inclusion in Regulatory own funds.

4) Deferred tax has been deducted from Regulatory own funds. No requirement to do so in the financial statements.

5) Audited collective provisions up to a maximum of 1.25% of risk weighted assets is allowable for inclusion in own funds.

1) Regulatory own funds includes retained profits from Wells Fargo International B.V. whereas the WFBI Financial statements are prepared on

a standalone basis.


Capital management and planning is a critical component of risk management. This involves

the linking of WFBI’s estimates of risk and associated risk capital to the completion of a

business forecast to allow WFBI to plan for and raise any needed capital.

Capital requirements (continued)

Using the business forecast, the projection of required capital to support the business is

compared against expected available capital in order to ensure that adequate capital will be

available to cover losses and meet projected business needs consistent with WFBI’s approved

Risk Appetite. This assessment is reviewed annually as part of the business planning cycle or

following any significant change to the business strategy and or risk profile. The WFBI ICAAP

was last approved by the Board in December 2015. A copy of the 2015 ICAAP will be made

available to the relevant competent authority upon request.

Capital adequacy ratios are reported quarterly to the Central Bank of Ireland (“CBI”)

employing techniques based on the rules and ratios established in CRD IV. During the years

ended 31 December 2015 and 2014, WFBI complied with all external regulatory capital

requirements.

Regulatory capital required is calculated based on the risk weightings of all assets owned in

accordance with CRD IV, utilizing the Standardised Approach for credit, market and operational

risk.

No WFBI asset portfolios have adopted the foundation or advanced IRB approach when

calculating capital requirements.

WFBI does not have a Trading Book and consequently does not have an Own Funds

requirement for position risk or for permitted large exposures as set out in Article 92 3(b) of the

CRR.

WFBI does not have equity exposures.

Table 5:

Internal Capital

Reputational risk and other risks not explicitly stated above are considered by WFBI during the

year and are subsumed into the other risk categories.

Internal Capital 2015 2014

Credit Risk 880,145 920,984

Market FX Risk 1,726 322

Operational Risk 25,037 22,689

Internal Capital Required- Regulatory 906,908 943,995

Credit Grade Migration Risk 342 1,439

Credit Concentration Risk 45,346 99,289

Interest rate risk in the banking book 17,704 17,140

Internal Capital Required- Non - Regulatory 63,392 117,868

Total Internal Capital Required 970,300 1,061,863


WFBI does not apply the IRB approach when calculating own funds requirements. It uses the

standardised approach and applies credit risk mitigation where applicable. WFBI’s own funds

requirements at year end were as follows:

Capital requirements (continued)

Table 6:

Using the standardised approach for credit risk for all portfolios, set out below are WFBI’s

exposures on a risk weighted basis:

Table 7:

In accordance with the CRR, deferred tax has been deducted from Regulatory own funds in 2015

& 2014.

Amount of Tier 1 and Tier 2 Regulatory capital, including separate disclosure 2015 2014

Eligible capital 2,283,976 1,530,187

Eligible reserves 303,251 209,392

Original Own Funds (Tier 1 capital) 2,587,227 1,739,579

Subordinated debt (Amortised) - 338,377

Add back Collective Provisions 62,292 78,102

Additional own funds (Tier 2 capital) 62,292 416,479

Total Own Funds for Solvency Purposes 2,649,519 2,156,058

Risk weighting & Credit Risk Capital

Risk weighted

amount

Risk weighted

amount

Credit Risk

Capital

requirement

Credit Risk

Capital

requirement

requirement 2015 2014 2015 2014

Central governments or central banks - - - -

Institutions 13,852 21,514 1,108 1,721

Corporates 6,384,491 7,220,004 510,761 577,601

Secured by mortgages on immovable property 3,777,335 3,168,330 302,187 253,466

Securitisation 27,238 54,849 2,179 4,388

Claims on institutions and corporates with a short-term

credit assessment

754,217 993,295 60,337 79,464

Exposures in default 41,243 51,962 3,299 4,157

Other items 3,426 2,340 274 187

Total Exposures 11,001,802 11,512,294 880,145 920,984


Exposure to counterparty credit risk

Counterparty Credit Risk is the risk of counter-party non-performance when engaging in

derivatives, foreign exchange, securities trading, collateral management and securities financing

activities. Risk is measured across the portfolio as Direct Credit (Gross Direct) which applies to

lending products, money market placements and nostros and Operating Credit (PFE-potential

future exposure and TRE-total risk exposure) which applies to Repos and FX products.

Counterparty Credit Risk is considered as part of the WFBI’s overall Credit Risk. WFBI adheres

to the provisions and requirements outlined in the WFBI Credit Policy in respect of

Counterparty Risk.

Wrong-way risk occurs when an exposure to a counterparty is adversely correlated with the

credit quality of that counterparty. Wrong-way risk is considered low as all derivatives are

entered into with affiliate counterparties.


The tables below set out the disclosures of financial assets and financial liabilities that are

subject to an enforceable master netting arrangement but are not offset in the Statement of

Financial Position.

Table 8:

A downgrade on the credit rating of WFBI, occurring as a single event, will not impact the

collateral requirement. Further information on collateral is located in section vii. “Derivative

Financial Instruments” within the “Credit Risk Adjustments” section.

WFBI does not transact credit derivative transactions and does not use the Internal Model

Method. Consequently, WFBI has no requirement to make an estimate of ALPHA used in the

Internal Model Method.

Capital buffers

Institutions will be required to maintain in addition to the CET1 capital required to meet the

own funds requirements imposed by Article 92 of the CRR, a capital conservation buffer of CET1

equal to 2.5% of their total risk exposure amount. Requirements to hold this additional buffer,

which will be at an individual and consolidated level, do not become effective until 2016 when

transitional arrangements will commence and therefore no geographical distribution of WFBI’s

credit exposure relevant to the countercyclical buffer is disclosed.

WFBI is not required to hold any institution countercyclical capital buffers.

As at 31 December 2015 Net amounts

Derivative instruments held for trading

Foreign currency forwards assets 161,724 (32,006) 129,718

Foreign currency forwards liabilities 32,006 (32,006) -

As at 31 December 2014 Net amounts


Foreign currency forwards assets 111,035 (13,039) 97,996

Foreign currency forwards liabilities 13,039 (13,039) -

Gross and net amounts of

financial instruments in

the statement of financial

position

Related financial

instruments that are

not offset

Gross and net amounts of

financial instruments in

the statement of financial

position

Related financial

instruments that are

not offset


Global and other systemically important institutions

Global systemically important institution (“G-SII”) buffer requirements will be incrementally

introduced from 1 January 2016 for identified G-SIIs, in accordance with the phase-in period

stipulated in Regulation 123(15) of S.I. 158/2014.

Regulation 123 of S.I. 158/2014 also provides that a capital buffer requirement may be applied,

from 2016, to identify “other systemically important institutions” (“O-SIIs”), as defined in

Regulations 121 and 122 of S.I. 158/2014.

As of yet, WFBI has not been designated as a G-SII or indeed an O-SII.

Credit risk adjustments

The following are definitions used by WFBI:

Impairment: financial assets are impaired when objective evidence

demonstrates that a loss event has occurred after the

initial recognition of the asset, and that the loss event has

an impact on future cash flows on the asset that can be

estimated reliably.

Past due: a financial asset is past due when a counterparty has failed

to make a payment when contractually due.

Credit risk is the risk of loss due to adverse changes in an issuer’s, borrower’s or counterparty’s

ability to meet its financial obligations under agreed upon terms. The nature and amount of

credit risk depends on the type of transaction, the structure of that transaction and the parties

involved. While credit risk is incurred in WFBI’s funding and balance sheet management

activities, it is typically only incidental to those businesses.

Credit risk adjustments (continued)

Credit risk is central to the profit strategy in lending and financing activities, and as a result,

WFBI’s credit risk resides principally in loans and advances to banks, loans and advances to

customers, the available-for-sale securities portfolios and supply chain finance.

i. Management of credit risk

Credit risk is managed through a combination of policies and procedures that track,

assess and regularly update exposures in a centralised reporting function. Authority to

approve individual exposures for less than or equal to $350,000 rests exclusively with


the Credit Committee. All exposures greater than this limit require approval by the

Board.

All exposures comprising the balance of loans and advances to banks, loans and

advances to customers and available-for-sale securities as well as the counterparties

WFBI deals with in its funding and balance sheet management activities, are individually

approved based on a number of factors. These include the financial strength of the

borrower or counterparty, the value of collateral securing the loan, trends in the market

sector, transaction structure and the general economic outlook consistent with the

approved Risk Appetite Statement.

Measuring and monitoring credit risk is an ongoing process that tracks (where

applicable) delinquencies, credit quality, country risk rating and other indications of

developing credit risk. Our credit risk monitoring process is designed to enable early

identification of developing risk and to support our determination of an appropriate

allowance for credit losses.

WFBI has entered into sale and repurchase agreements (reverse repos) with non-

affiliated and affiliate counterparts whereby WFBI has made a loan and has received

securities as collateral. These transactions are conducted under terms that are usual and

customary to standard securities borrowing and lending activities.

WFBI has policies and procedures for the management and valuation of collateral. The

principal types of collateral taken are: cash, commercial real estate and asset backed

securities.

Limits for credit risk concentrations are set by the Risk Committee and approved by the

Board. WFBI Risk will monitor and report on Concentration Risk to the Risk Committee

and Board as part of its standard quarterly reporting.



ii. Impairment

On at least a quarterly basis, WFBI assesses whether there is objective evidence that

financial assets are impaired. Financial assets are impaired when objective evidence

demonstrates that a loss event has occurred after the initial recognition of the asset, and

that the loss event has an impact on future cash flows on the asset that can be estimated

reliably.

WFBI considers many factors to determine if objective evidence exists that a financial

asset, or a portfolio of assets, is impaired including (a) whether the impairment is

significant or prolonged; (b) recent events specific to the issuer or industry; and (c) for

debt securities, external credit ratings and recent downgrades. Objective evidence that

financial assets are impaired can include a breach of contract, such as a default or

delinquency by a borrower, restructuring of a loan or advance by WFBI on terms that

WFBI would not otherwise consider, indications that a borrower or issuer will enter

bankruptcy, the disappearance of an active market for a financial asset, or other

observable data relating to a group of assets such as adverse changes in the payment

status of borrowers or issuers relating to such a group, or economic conditions that

correlate with defaults in such a group.

WFBI considers evidence of impairment at both a specific asset and collective level. All

individually significant financial assets are assessed for specific impairment. All

significant assets found not to be specifically impaired are then collectively assessed for

any impairment that has been incurred but not yet identified. Assets that are not

individually significant are then collectively assessed for impairment by grouping

together financial assets (carried at amortised cost) with similar risk characteristics.

iii. Impairment of loans and advances to banks and customers and provision for loan

losses

A loan is considered to be impaired when, based on current information, it is determined

that WFBI will not ultimately receive all amounts due in accordance with the contractual

terms of a loan agreement. If an impairment loss has been incurred on a loan carried at

amortised cost, the amount of the loss is measured as the difference between the asset’s

carrying amount and the present value of estimated future cash flows discounted at the

loan’s original effective interest rate or the fair value of the collateral if the loan is

collateral dependent.

Commercial property valuations are based on opinions from professional valuers,

investment property database indices, local knowledge of the properties, benchmarking

similar properties and other industry-wide available information, including estimated

yields and estimated discount rates.



iii. Impairment of loans and advances to banks and customers and provision for loan

losses (continued)

The valuation methodologies outlined above are determined as close to the reporting

date as is feasible and are therefore considered by the Board of Directors to reflect their

best estimate of current values of collateral held.

WFBI have policies and procedures for assessing the adequacy of the provision for loan

losses that reflect the assessment of credit risk considering all objective evidence

available. This assessment includes monitoring qualitative and quantitative trends

including changes in the levels of past due, criticised and nonperforming loans. In

developing this assessment, WFBI must rely on estimates and exercise judgment in

assessing credit risk. Depending on changes in circumstances, future assessments of

credit risk may yield materially different results from the estimates, which may require

an increase or a decrease in the provision for loan losses.

WFBI employs a variety of modeling and estimation tools for measuring credit risk,

which are used in developing an appropriate provision for loan losses. The provision for

loan losses consists of formula-based components for each collective assessment, which

includes a factor for imprecision and a reserve for impaired loans, as applicable. The

factors supporting the provision for loan losses do not diminish the fact that the entire

provision for loan losses is available to absorb losses in the loan portfolio and related

commitment portfolio, respectively. WFBI’s principal focus, therefore, is on the

adequacy of the total provision for loan losses.

Losses are recognised in the income statement and reflected in an allowance account

against loans and advances. When a subsequent event causes the amount of impairment

loss to decrease, the decrease in impairment loss is reversed through the income

statement. Following impairment, interest income is recognised using the effective rate

of interest.

iv. Impairment of available-for-sale financial assets

Impairment losses on available-for-sale financial assets are recognised by transferring

the cumulative loss that has been recognised directly in equity to the income statement.

The cumulative loss that is removed from equity and recognised in the income statement

is the difference between the acquisition cost, net of any principal repayment and

amortisation, and the current fair value, less any impairment loss previously recognised

in the income statement.

If, in a subsequent period, the fair value of an impaired available-for-sale financial asset

increases and the increase can be objectively related to an event occurring after the

impairment loss was recognised in the income statement, the impairment loss is

reversed, with the amount of the reversal recognised in the income statement.



v. Risk Weightings

On and off balance sheet exposure values after specific provisions and before credit risk

mitigation are presented as follows:

Table 9:

vi. Exposure to credit risk

Concentration risk is also managed through geographic and sector diversification and the

following tables analyse exposures in that fashion. Note that the analysis is presented on the

basis of the ultimate exposure and exposures shown are net of provisions:

Table 10:

Exposure values before CRM 2015 2014

0% 24,258 27,847

20% 7,330,663 5,582,136

50% 1,289,461 1,636,313

100% 11,027,829 10,084,880

150% 27,495 626,680

Total Exposures 19,699,706 17,957,856

Exposure

Value before

CRM

Exposure

Value before

CRM

Average

Exposure

Value before

CRM

Average

Exposure

Value before

CRM

2015 2014 2015 2014

Central governments or central banks 24,258 27,846 28,668 25,059

Institutions 69,257 67,378 84,925 636,870

Corporates 10,432,222 8,758,987 9,877,451 7,790,030

Secured by mortgages on immovable property 3,967,086 3,336,684 4,356,798 3,145,074

Securitisation 136,188 268,505 119,252 635,466


credit assessment

5,039,773 5,461,475 4,364,993 3,785,862

Exposures in default 27,496 34,641 28,243 43,890

Other items 3,426 2,340 4,127 30,477

Total Exposures 19,699,706 17,957,856 18,864,457 16,092,728

Exposure Values & Average Exposure Values



vi. Exposure to credit risk (continued)

Exposures by geographic distribution are provided in the tables below:

Table 11:

Exposures by External Credit Assessment Institutions (“ECAI”) are provided in the tables below:

Table 12:

As at 31 December 2015 Americas APAC

EMEA (Ex

Ireland) Ireland Total

Central governments or central banks - - - 24,258 24,258

Institutions 12,916 - 32,120 24,221 69,257

Corporates 2,408,252 75,048 3,618,939 4,329,983 10,432,222

Secured by mortgages on immovable property 72,953 - 3,723,337 170,796 3,967,086

Securitisation - 7,288 128,900 - 136,188


credit assessment 3,657,313 2,376 1,379,441 643 5,039,773

Exposures in default - - 27,496 - 27,496

Other items - - 601 2,825 3,426

6,151,434 84,712 8,910,834 4,552,726 19,699,706

As at 31 December 2014 Americas APAC

EMEA (Ex

Ireland) Ireland Total

Central governments or central banks - - - 27,846 27,846

Institutions - 2,786 37,796 26,796 67,378

Corporates 411,056 - 2,947,222 5,400,709 8,758,987

Secured by mortgages on immovable property 77,256 - 3,251,440 7,988 3,336,684

Securitisation - 49,688 218,033 784 268,505


credit assessment 4,027,804 2,439 1,430,479 753 5,461,475

Exposures in default - - 34,641 - 34,641

Other items - - 9 2,331 2,340

4,516,116 54,913 7,919,620 5,467,207 17,957,856

As at 31 December 2015 1 2 3 4 5 NR Total

Central governments or central banks - - - - - 24,258 24,258

Institutions - - - - - 69,257 69,257

Corporates 2,125,448 1,249,457 2,428,124 188,229 - 4,440,964 10,432,222

Secured by mortgages on immovable property - - - - - 3,967,086 3,967,086

Securitisation 136,188 - - - - - 136,188

Claims on institutions and corporates with a short-

term credit assessment

4,819,802 108,212 111,099 643 - 17 5,039,773

Exposures in default - - - - - 27,496 27,496

Other items - - - - - 3,426 3,426

7,081,438 1,357,669 2,539,223 188,872 - 8,532,504 19,699,706

Credit Quality Step


As at 31 December 2014 1 2 3 4 5 NR Total

Central governments or central banks - - - - - 27,846 27,846

Institutions 162 - - - - 67,216 67,378

Corporates 125,000 1,267,213 3,551,671 243,017 591,342 2,980,744 8,758,987

Secured by mortgages on immovable property - - 140,830 - - 3,195,854 3,336,684

Securitisation 264,677 3,828 - - - - 268,505

Claims on institutions and corporates with a short-

term credit assessment 4,963,065 449,795 45,050 695 - 2,870 5,461,475

Exposures in default - - - - - 34,641 34,641

Other items - - - - - 2,340 2,340

5,352,904 1,720,836 3,737,551 243,712 591,342 6,311,511 17,957,856

Credit Quality Step




Exposures by counterparty type are provided in the tables below:

Table 13:


Business and Administrative Services - - 1,301,281 - - - - - 1,301,281

Central Banks 24,258 - - - - - - - 24,258

Construction - - 57,465 - - - - - 57,465

Credit Institutions - 69,257 - - - 3,846,384 - - 3,915,641

Financial Intermediation (Excl. Monetary Financial Institutions) - - 6,052,061 73,669 136,188 1,153,386 - - 7,415,304

Hotels and Restaurants - - 40,071 946,492 - - - - 986,563

Information and Communication - - 283,655 - - 40,000 - - 323,655

Manufacturing - - 1,308,907 - - 3 - - 1,308,910

Primary Industries - - 79,300 - - - - - 79,300

Real Estate, Land and Development Activities - - 519,855 2,946,925 - - 27,496 - 3,494,276

Transportation and Storage - - 47,484 - - - - - 47,484

Wholesale/Retail Trade & Repairs - - 1,028 - - - - 3,426 4,454

Other items - - 741,115 - - - - - 741,115

24,258 69,257 10,432,222 3,967,086 136,188 5,039,773 27,496 3,426 19,699,706

Central

governments

or central

banks Institutions Corporates

Secured by

mortgages

on

immovable

property Securitisation

Claims on

institutions

and

corporates

with a short-

term credit

Exposures

in default Other items Total



Business and Administrative Services - - 345,486 - - - - - 345,486

Central Banks 27,846 - - - - - - - 27,846

Construction - - 57,095 - - - - - 57,095

Credit Institutions - 67,216 - - - 4,449,519 - - 4,516,735

Financial Intermediation (Excl. Monetary Financial Institutions) - 162 5,738,863 34,952 268,505 1,011,956 - 6 7,054,444

Hotels and Restaurants - - 69,908 144,312 - - - - 214,220

Information and Communication - - 330,279 - - - - - 330,279

Manufacturing - - 1,325,902 - - - - - 1,325,902

Real Estate, Land and Development Activities - - 121,672 3,157,420 - - 34,641 - 3,313,733

Transportation and Storage - - 228,982 - - - - - 228,982

Wholesale/Retail Trade & Repairs - - - - - - - 2,331 2,331

Other items - - 540,800 - - - - 3 540,803

27,846 67,378 8,758,987 3,336,684 268,505 5,461,475 34,641 2,340 17,957,856

Central

governments

or central

banks Institutions Corporates

Secured by

mortgages

on

immovable

property Securitisation

Claims on

institutions

and

corporates

with a short-

term credit

assessment

Exposures

in default Other items Total




Residual contractual maturities are provided in the tables below:

Table 14:

Between Between Between

Less than 3 months 6 months 1 year More than

As at 31 December 2015 3 monthsand 6 monthsand 12 months and 5 years 5 years Total

Central governments or central banks 24,258 - - - - 24,258

Institutions 69,257 - - - - 69,257

Corporates 626,083 10,952 3,083,068 6,632,819 79,300 10,432,222

Secured by mortgages on immovable property 180,288 14,231 361,386 3,199,035 212,146 3,967,086

Securitisation - - - - 136,188 136,188

Claims on institutions and corporates with a short-term credit assessment 5,039,773 - - - - 5,039,773

Exposures in default - - 27,496 - - 27,496

Other items 3,426 - - - - 3,426

5,943,085 25,183 3,471,950 9,831,854 427,634 19,699,706

Between Between Between

Less than 3 months 6 months 1 year More than

As at 31 December 2014 3 monthsand 6 monthsand 12 months and 5 years 5 years Total

Central governments or central banks 27,846 - - - - 27,846

Institutions 67,378 - - - - 67,378

Corporates 1,020,297 40,669 4,389,852 3,247,193 60,976 8,758,987

Secured by mortgages on immovable property 117,809 81,948 518,879 2,301,744 316,304 3,336,684

Securitisation - - - - 268,505 268,505

Claims on institutions and corporates with a short-term credit assessment 5,461,475 - - - - 5,461,475

Exposures in default 34,641 - - - - 34,641

Other items 2,340 - - - - 2,340

6,731,786 122,617 4,908,731 5,548,937 645,785 17,957,856




An analysis of impairment allowances by geographic distribution is provided in the tables below:

Table 15:


Impairment provision by Geographic distribution Specific Collective Total

Ireland - 20,098 20,098

Luxembourg - 5,171 5,171

UK - 30,796 30,796

Germany 22,921 - 22,921

Other - 6,404 6,404

Total Impairment provision 22,921 62,469 85,390


Impairment provision by Geographic distribution Specific Collective Total

Ireland - 34,869 34,869

Luxembourg - 1,678 1,678

UK - 23,949 23,949

Germany 19,677 - 19,677

Other - 1,796 1,796

Total Impairment provision 19,677 62,292 81,969




The following tables show a reconciliation of changes in impairment allowances broken down by

exposure type:

Table 16:

Specific allowances for impairment 2015

Secured on real

estate property Corporates

Balance at beginning of the year 19,677 19,677 -

Impairment loss for the year:

Charge for the year 5,396 5,396 -

Loans written off during the year as uncollectible - - -

Exchange adjustments (2,152) (2,152) -

Balance at end of the year 22,921 22,921 -

Collective allowances for impairment

Balance at beginning of the year 62,292 12,354 49,938


Charge/ (Credit) for the year 2,777 (2,174) 4,951

Exchange adjustments (2,600) (2,354) (246)

Balance at end of the year 62,469 7,826 54,643

Total allowances for impairment 85,390 30,747 54,643




An analysis of past due and specifically impaired exposures is presented in the following table:

Table 17:

*All past due and impaired exposures are specific provisions on assets located in Europe.

vii. Derivative financial instruments

Specific allowances for impairment 2014

Secured on real

estate property Corporates

Balance at beginning of the year 87,724 87,724 -


Charge for the year 3,447 3,447 -

Loans written off during the year as uncollectible (66,650) (66,650) -

Exchange adjustments (4,844) (4,844) -

Balance at end of the year 19,677 19,677 -

Collective allowances for impairment

Balance at beginning of the year 78,102 30,538 47,564


Charge/ (Credit) for the year (13,630) (16,097) 2,467

Exchange adjustments (2,180) (2,087) (93)

Balance at end of the year 62,292 12,354 49,938

Total allowances for impairment 81,969 32,031 49,938

Exposure as at 31 December 2015

Neither past

due or

impaired

Past due 1 -

90 days Impaired Total

Central governments or central banks 24,258 - - 24,258

Institutions 69,257 - - 69,257

Corporates 10,360,309 71,913 - 10,432,222

Secured by mortgages on immovable property 3,946,297 - 20,789 3,967,086

Securitisation 136,188 - - 136,188

Claims on institutions and corporates with a short-term credit assessment 5,039,773 - - 5,039,773

Exposures in default 27,496 - - 27,496

Other items 3,426 - - 3,426

Total Exposures 19,607,004 71,913 20,789 19,699,706

Exposure as at 31 December 2014

Neither past

due or

impaired

Past due 1 -

90 days Impaired Total

Central governments or central banks 27,846 - - 27,846

Institutions 67,378 - - 67,378

Corporates 8,671,901 87,086 - 8,758,987

Secured by mortgages on immovable property 3,336,684 - 29,052 3,336,684

Securitisation 268,505 - - 268,505

Claims on institutions and corporates with a short-term credit assessment 5,461,475 - - 5,461,475

Exposures in default 34,641 - - 34,641

Other items 2,340 - - 2,340

Total Exposures 17,870,770 87,086 29,052 17,957,856


WFBI uses derivatives to manage exposure to interest rate risk and foreign currency risk.

All derivatives are recorded on the Statement of Financial Position at their respective fair

values with unrealised and realised gains and losses recorded in the Income Statement.

Under IFRS, derivatives are classified as derivatives held for trading. Derivative

instruments are reported as assets and liabilities regardless of whether or not a legal

right of set-off exists in a master netting agreement.

The derivatives have not been designated in a qualifying hedging relationship, however

they do form part of effective economic hedge relationships. All WFBI’s derivatives were

entered into with Wells Fargo Bank National Association (“WFBNA”) and are subject

to conditions set out in a Credit Support Annex (“CSA”) entered into by both parties.

Under the CSA, when a predefined unrealised loss is incurred by a counterparty, that

counterparty must post a cash margin, representing collateral, with the other

counterparty.



vii Derivative financial instruments (continued)

Table 18:

Derivative exposure values are calculated under the mark to market method.

At 31 December 2015, WFBI’s counterparties had posted cash collateral with WFBI for which

WFBI had recognised payables of $125,332 (2014: $100,628).

The following table shows the reverse repo agreements WFBI has entered into and the

associated collateral allowable for credit risk mitigation purposes:

Table 19:

Notional

As at 31 December 2015 Amount Assets Liabilities


Foreign currency forwards 9,391,369 161,724 32,006

Total derivative assets / liabilities 9,391,369 161,724 32,006

Notional

As at 31 December 2014 Amount Assets Liabilities


Foreign currency forwards 5,299,274 111,035 13,039

Total derivative assets / liabilities 5,299,274 111,035 13,039

Fair value of:

Fair value of:

Reverse repurchase transactions 2015 2014

Gross exposure

Bank Non-Affiliate 2,000,000 -

Non Bank Affiliate 1,131,790 976,917

Total 3,131,790 976,917

Fair value of collateral received 3,182,496 977,589


Use of ECAIs

WFBI applies credit ratings to its exposures using ratings attributed by External Credit

Assessment Institutions (“ECAI’s”) – Moody’s Investor Services, Standard & Poor’s, Fitch

Ratings and DBRS. Refer to page 16 for an analysis of the ratings of WFBI exposures. WFBI

does not use internal capital ratings for regulatory capital purposes.

WFBI’s use of external credit ratings under the Standardised approach is set out in the

paragraphs below:

a. If only one credit assessment is available from a nominated ECAI for a rated item,

that credit assessment shall be used to determine the risk weight of that item;

b. If two credit assessments are available from nominated ECAIs and two correspond to

different risk weights for a rated item, the higher risk weight shall be assigned; and

c. If more than two credit assessments are available from nominated ECAIs for a rated

item, the two assessments generating the two lowest risk weights shall be referred to.

d. If the two risk weights are different, the higher risk weight shall be assigned. If the

two lowest risk weights are the same, that risk weight shall be assigned.

Only ECAI credit ratings are used for regulatory risk weighting purposes. If these criteria are

not met, the exposure is mapped as “unrated”, and the appropriate risk weighting for unrated

exposures is assigned.

The alignment of the alphanumerical scale of each agency to risk weights is as per the standard

mapping issued by the CBI.

A sizeable proportion of the Corporate exposure class is risk weighted based on DBRS ratings.

Clients and counterparties in other exposure classes whose risk weights are based on external

ratings generally have ratings from more than one rating agency.

WFBI does not have a trading book and therefore no process is required to transfer the issuer

and issue credit assessments onto items not included in the trading book.


Exposure to market risk

Market risk is the risk of loss resulting from changes in the value of assets and liabilities (including on and off-balance sheet assets and liabilities) and changes in earnings and/or reserves due to changes in financial prices, including interest rates, credit spreads and exchange rates. The objective of market risk management is to identify, manage and control market risk exposures within acceptable parameters, while optimising the return on risk. Overall authority for market risk responsibility is vested in the Risk Committee.

Management of market risk

i. Interest rate risk in the banking book

See section “Exposure to interest rate risk on positions not included in the trading book”.

ii. Foreign exchange (FX) risk

WFBI qualifies for the standardised approach for FX Market Risk, and has implemented

that approach.

WFBI economically hedges foreign exchange risk related to financial assets and liabilities

denominated in currencies other than the US dollar. Foreign exchange risk for all

portfolios is managed collectively with the intent of limiting unhedged net foreign

exchange risk positions to a predefined limit. Foreign exchange positions are hedged by

either matching the balances of non-dollar assets and liabilities in the same currency or

by executing forward foreign exchange contracts to reduce the risk of unmatched

balances. Reports of the net foreign exchange position are prepared on a daily basis and

reviewed by risk management with reporting of any breaches to ALCO, Risk Committee

and Board (outer boundary breach only). At 31 December 2015, net unhedged foreign

currency exchange exposure was within prescribed policy limits. Due to the small

amount of net exposure management believes the risk to changes in foreign exchange

rates would have an immaterial effect on future net income and capital.

All derivatives are recorded on the Statement of Financial Position at their respective fair

values with unrealised and realised gains and losses recorded in the Income Statement.

WFBI does not have any commodities positions. Commodity risk is not applicable.

Settlement risk is deemed to be minimal as WFBI only has one affiliate counterparty to

its foreign exchange transactions.


Liquidity risk

Management of liquidity risk

Liquidity Risk is defined as the risk that that the Bank will not be able to finance its assets

and/or meet its liabilities when they fall due, or will only be able to meet them at an uneconomic

price.

WFBI’s approach to managing liquidity is to ensure, as far as possible, that it will always have

sufficient liquidity to meet its obligations when due, under both normal and stressed conditions,

without incurring excessive costs or risking damage to its reputation. WFBI obtains the

majority of its funding internally and it operates within Wells Fargo’s objectives to centrally co-

ordinate its funding, to manage global liquidity risk, to ensure adequate market access to

funding and to maintain a widely diversified funding base. As such, Wells Fargo has submitted

a letter of comfort to the CBI in favour of WFBI stating that WFBI will be in a position to meet

its liabilities as they become due so long as Wells Fargo is the majority owner of the equity

capital of WFBI.

WFBI maintains a Liquidity Management Policy intended to conform to the Requirements for

the Management of Liquidity Risk (29 June 2009) as issued by the CBI and the Committee of

European Banking Supervisors (“CEBS”) Guidelines on Liquidity Buffers and Survival Periods

(December 2009). The policy sets out procedures for the management of liquidity risk and has

been approved by the ALCO and the Board. It is the responsibility of ALCO to set appropriate

liquidity risk limits that are consistent with WFBI’s risk tolerance, nature, scale and complexity

of operations. It is the responsibility of senior management to manage liquidity within the

stated limits and procedures established by ALCO.

As set out in the Liquidity Management Policy, the primary methodology for managing liquidity

is a maturity mismatch approach which requires the cash flows of WFBI’s assets and liabilities

to be analysed under the major categories and set out in time bands. Cash flows will be slotted

into the time bands based on their residual contractual maturity with assets being included

according to their latest maturity and liabilities according to the earliest possible date of the

obligation. A net mismatch figure is obtained by subtracting the cash outflows from the inflows.

Mismatches will be assessed on a net cumulative basis with a net inflow or outflow carried

forward to the next period. In addition a ratio of cash inflows divided by cash outflows will be

calculated for each time band and a stock of liquid assets must be held to meet any net cash

outflows in the first time band such that cash inflows plus allowable discounted liquid assets

must be greater than the 125% (inner boundary) and 100% (outer boundary) of cash outflows.

In the second time band, cash inflows plus any net positive cash flow carried forward from the

first time band must equal at least 125% (inner boundary) and a 90% (outer boundary) of cash

outflows. Monitoring ratios are set for all subsequent time bands.


Liquidity risk (continued)

Management of liquidity risk (continued)

Liquidity is monitored on a daily basis and reported monthly to the CBI. A breach of the inner

boundary limits for the first two time bands would trigger initiation of the contingency funding

plan as described in the Liquidity Management Policy. Regular liquidity stress testing is

conducted under a variety of scenarios covering both normal and more severe market conditions

to ensure ratios are expected to remain within the limits.

This buffer is monitored weekly and stress tested monthly. WFBI also manage and monitor the

respective liquidity/capital ratio’s required under the CRR. The Liquidity Coverage Ratio

(“LCR”) is calculated daily and reported to the CBI monthly. The Net Stable Funding Ratio

(“NSFR”) and Leverage Ratio are calculated quarterly and reported to the CBI. The treasury

and risk teams monitor these respective ratios on a constant basis and report LCR (whole firm

and currency specific) and NSFR ratio’s to the ALCO, Risk Committee and Board. In addition,

WFBI also regularly assesses its access to the market via major external funding providers.

Furthermore, WFBI holds a buffer of High Quality Liquid Assets (“HQLAs”) and Liquid Assets

sufficient to withstand one month of stresses similar to those observed in September 2008.

WFBI does not have any commodities positions. Commodity risk is not applicable. Settlement

risk is deemed to be minimal as WFBI only has one affiliate counterparty to its foreign exchange

transactions.

Credit concentration risk

Credit concentration risk is the risk of losses arising as a result of concentrations of exposures

due to imperfect diversification. This imperfect diversification can arise from the small size of a

portfolio or a large number of exposures to specific obligors (single name concentration) or from

imperfect diversification with respect to economic sectors or geographical regions.

WFBI measures concentration risk based on single name, economic sector and geographic

concentrations and assigns Pillar II capital accordingly.

WFBI maintain geographic, asset class, credit quality and single name concentration risk limits.


Credit grade migration risk (“CGMR”)

WFBI calculates its Regulatory Capital Requirement using the “Standardized Approach to Credit

Risk”. Under this approach, Pillar 1 Risk Weightings are applied to assets rated by a nominated

External Credit Assessment Institutions (“ECAI”). Assets not rated by a nominated ECAI are

Risk-Weighted 100%, or 150% if delinquent (>90 days past due).

CGMR results from the probability that credit grades will migrate over time. If this migration

represents deterioration in the credit grade of an asset, this can result in a higher Risk

Weighting under Pillar 1. This will translate to an increased Pillar 1 capital allocation for that

asset. As Wells Fargo’s Risk Rating methodology is deeply rooted in expert judgement, WFBI’s

approach to CGMR is based on the close internal management and monitoring of the portfolio.

The Board is responsible for oversight of CGMR and sets limits to this risk, in accordance with

the WFBI risk appetite statement. Control of the monitoring is delegated to the Risk Committee

as part of its overall assessment of capital adequacy and maintenance of the WFBI ICAAP. The

CGMR movements and the impact upon required capital are discussed in the Risk Committee

on a quarterly basis. Breaches of the Inner and Outer Boundary are notified and escalated as

per the WFBI Risk Appetite Statement Governance Protocol. The adequacy of capital reserved

for CGMR is back tested on an annual basis against the additional capital requirements due to

downgrades and delinquencies in that year.

Operational risk

Operational risk is the risk of loss resulting from inadequate or failed internal processes, people,

and systems, or from external events and is inherent in our business. In evaluating and

managing operational risks, WFBI considers strategic and reputational risks and their

relationships to operating activities. As a result, internal control systems are designed to

mitigate operational risks and adequately address associated strategic and reputational

components. Operational failure can also contribute to, or increase the size of, losses in other

risk types discussed above. WFBI has implemented an Operational Risk framework aligned to

the Wells Fargo operational risk functional framework and oversight policy to effectively

manage and measure operational risk. They define the disciplines, roles and responsibilities

and activities intended to mitigate uncertainties around expected outcomes.

By acting in accordance with this framework, WFBI seeks to identify and effectively manage

operational risk with benefits including increased customer satisfaction and enhanced

reputation, lower earnings volatility, maintenance of adequate capital reserves to cover

operational risk and the compliance with all applicable laws and regulations.


Exposures in equities not included in the trading book

WFBI does not have a trading book or exposures in equities.

Exposures to interest rate risk on positions not included in the trading book

Interest rate risk in the banking book (“IRRBB”) arises from mismatches between assets and

liabilities, both in the dates at which they are re-priced and the rates applied to the re-pricing.

WFBI assesses IRRBB in terms or re-pricing risk, yield curve risk, basis risk and optionality and

allocates Pillar II capital accordingly.

The principal risk to assets held to generate net interest margin is that changes in market

interest rates may diminish net interest income earned on those portfolios. WFBI manages

interest rate risk on these portfolios and their related funding sources by forecasting the total

net interest income of WFBI. WFBI’s policy is to limit the forecasted negative impact in net

interest income due to changes in interest rates under the rising and falling rate scenarios to a

predefined percentage of forecasted net interest income.

WFBI management regularly assesses the viability of strategies to reduce unacceptable interest

rate risks to earnings, and such strategies are implemented when those actions are believed to

be prudent. It is the responsibility of ALCO and senior management to ensure sensitivity

remains within the prescribed internal policy limits.

At 31 December 2015, WFBI’s sensitivity to changes in projected net interest income over the

policy period in the lower interest rate scenario is currently measured using a 25 basis point

shock, which is considered appropriate given the current low interest rate environment. Such a

shock would reduce year end net interest income by $7,125 or 5.54%. This is within the internal

limit of -7% net interest income. As a current benign low interest rate environment is forecast to

prevail over the next 12 months, management have elected not to take corrective action at this

point, as a normalisation of rates would be beneficial for net interest income. This decision is

re-evaluated at ALCO meetings.

Exposure to securitisation positions

Securitisation risk includes the risk of liquidity, prepayment and impairment such as credit loss.

WFBI does not have a trading book, limiting the liquidity risk from bond sales as securities are

generally held till final maturity. WFBI does not engage in any structuring of securitization

products and the securities portfolio does not contain any retained securitisation or re-

securitisation exposures. WFBI does not act as an originator, sponsor or original lender in

securitisations. As such currently only the requirements relating to investors in securitisations

are applicable for WFBI. WFBI does hold investments in senior tranches of UK and Australian


RMBS; these are considered low level of credit risk as they have high levels of credit

enhancement and provide a regulatory liquidity benefit to WFBI.

Exposure to securitisation positions (continued)

WFBI qualifies for the Standardised approach for securitisations, and has implemented that

approach.

The ECAIs utilised are: Moody’s Investor Services, Standard & Poor’s, Fitch Ratings and DBRS.

The total securitisation exposures including accrued interest and any specific impairments are

shown below:

Table 20:

Exposure Impairment Recognised

As at 31 December 2015 Losses

Synthetic transactions - - -

Traditional transactions 136,188 - -

Total 136,188 - -

Exposure Impairment Recognised

As at 31 December 2014 Losses

Synthetic transactions - - -

Traditional transactions 268,505 - -

Total 268,505 - -


The risk weighting of the securitised assets held for investment are:

Table 21:

Leverage

CRD IV requires firms to disclose a non-risk based leverage ratio and the processes used to

manage the risk of excessive leverage. The leverage ratio measures the relationship between the

capital resources of the organisation and its total assets. The purpose of monitoring and

managing this metric is to enable regulators to constrain the build-up of excessive leverage.

It is calculated as: Tier 1 capital / Total on and off-balance sheet assets adjusted for deductions. The Basel III framework published by the Basel Committee on Banking Supervision (‘BCBS’) contains a minimum requirement of 3 per cent for the leverage ratio during the testing phase for the framework, which runs until 1 January 2017. As shown in the table below, the Bank’s leverage ratio was in excess of this minimum requirement at 31st December 2015. In accordance with Article 429 (2) of the CRR, WFBI is calculating the ratio using end of quarter data. This is permitted and as directed by the CBI under Article 499 (3), for the period covering 1st January 2014 to 31st December 2017.

WFBI’s leverage ratio is monitored by ALCO on a monthly basis and is included in the capital

forecast and business-as-usual stress testing. The Bank has a leverage ratio policy which

formalises the monitoring and escalation framework and the Bank’s leverage ratio limits.


Risk

Weighted

Credit Quality Step Retained Purchased Exposure

1 - 136,188 27,238

2 - - 0

3 - - -

4 - - -

All Other CQS

Unrated - - -

Total - 136,188 27,238


Risk

Weighted

Credit Quality Step Retained Purchased Exposure

1 - 264,677 54,849

2 - 3,828 3,828

3 - 0 0

4 - - -

All Other CQS

Unrated - - -

Total - 268,505 54,849

Securitisation positions – total exposures by

credit quality step

Securitisation positions – total exposures by

credit quality step


The below table reports the WFBI Consolidated Leverage Ratio, as at 31st December 2015 &

2014.

Summary reconciliation of accounting assets and leverage ratio exposures

Table 22:

Remuneration at Wells Fargo Bank International

Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on the

access to the activity of credit institutions and the prudential supervision of credit

institutions and investment firms (“CRD IV”) and Regulation (EU) 575/2013 of the

European Parliament and of the Council of 26 June 2013 prudential requirements for credit

institutions and investment firms (“CRR”) came into effect on 1 January 2014. CRD IV/CRR

builds on existing rules governing the amount and nature of capital that credit institutions

and investment firms must maintain. CRD IV/CRR also introduces new prudential and

governance requirements, including the introduction of a “bonus cap”, which supplement

existing restrictions on remuneration paid to certain staff. In accordance with CRD IV/CRR

and associated Guidelines (as applicable) issued by the European Banking Authority

(“EBA”), Wells Fargo Bank International discloses the following information regarding its

remuneration policies and practices.

Wells Fargo & Company (“Wells Fargo” or the “Company”) is a diversified financial

services company headquartered in San Francisco, California, United States of America.

WFBI is a subsidiary of Wells Fargo performing services in Ireland. WFBI is regulated by the

Central Bank of Ireland.

The remuneration strategy for officers and employees of Wells Fargo, its subsidiaries

(including WFBI) and affiliates is subject to the oversight of the Human Resources

Committee of Wells Fargo’s Board of Directors (the “HRC” or “Remuneration

Committee”). The operational application of the remuneration strategy to employees of

WFBI is monitored by Wells Fargo’s EMEA Remuneration Oversight Council (the

“Oversight Committee”) whose members include the Regional President of Wells Fargo’s

European, Middle Eastern and African entities (“EMEA”), the EMEA Chief Operating

Leverage Ratio 2015 2014

Paid up capital instruments 777,950 26,000

Previous years retained earnings 333,685 242,979

Other reserves 1,506,026 1,504,187

Less: Adjustments to CET 1 due to prudential filters (30,434) (33,587)

Total Tier 1 Capital 2,587,228 1,739,579

Total Assets per the statement of financial position 16,140,067 14,978,409

Off balance sheet items 3,363,098 2,851,877

Derivative exposure adjustment 87,879 50,289

Total Leverage Ratio Exposure 19,591,044 17,880,574

Leverage Ratio 13.2% 9.7%


Officer, the EMEA Regional Risk Executive, the EMEA Compliance and Operational Risk

Director, the EMEA Head of Human Resources, the manager of EMEA Compensation, the

Chief Executive Officer of WFBI, and the Chief Compliance Officer of WFBI.

The Oversight Committee reports to the Head of the International Group for Wells Fargo

and the Senior Human Resources Manager for the International Division of Wells Fargo, as

well as the Board of WFBI. The Oversight Committee is responsible for overseeing the

implementation of Wells Fargo’s remuneration policies and practices in EMEA, including for

WFBI, in compliance with applicable laws, rules, regulations and regulatory guidance.

Wells Fargo applies an enterprise-wide approach to remuneration policies and practices. As

such, the remuneration strategy for officers and employees of WFBI is subject to the

oversight of Wells Fargo’s Board of Directors (through the HRC) and of the Oversight

Committee and the WFBI Board at the local level. Wells Fargo’s remuneration systems and

practices are designed to discourage inappropriate and excessive risk-taking that benefits

individual employees at the expense of Wells Fargo, its stockholders and other stakeholders.

Remuneration at Wells Fargo Bank International (continued)

Wells Fargo implemented an enterprise incentive compensation risk management program

to develop corporate guidance for all Wells Fargo variable remuneration plans coupled with

detailed review, oversight and documentation standards to be applied equally to its entities

in the United States as well as those in Wells Fargo’s international locations, including WFBI

(the “ICRM Program”). The incentive compensation plans must take into account

multiple drivers of business performance and risk, including financial and non-financial

risks. Wells Fargo compensation programs are intended to be consistent with applicable

regulatory standards, including CRD IV.

More detailed information on Wells Fargo’s remuneration strategy, processes and practices,

including information about the HRC and the members of the HRC is contained in Wells

Fargo’s most recent public disclosure contained in the Proxy Statement for its 2016 Annual

Meeting of Stockholders dated March 16, 2016. The 2016 Proxy Statement can be found on

the U.S. Securities and Exchange Commission’s (“SEC”) website at www.sec.gov and on the

Investor Relations page of Wells Fargo’s website at the following link:

https://www.wellsfargo.com/invest_relations/annual

Role of the Remuneration Committee

The HRC discharges the Board of Directors’ duties relating to Wells Fargo’s overall

compensation strategy. The HRC is responsible for, among other things, establishing, in

consultation with senior management, Wells Fargo’s overall incentive compensation strategy

and overseeing Wells Fargo’s incentive compensation practices. For this purpose, the HRC

reviews and monitors risk-balancing and the implementation and effectiveness of risk

management methodologies relating to incentive compensation plans and programs for

http://www.sec.gov/

https://www.wellsfargo.com/invest_relations/annual


senior executives and employees whose activities, individually or as a group, may expose

Wells Fargo to material risk (“Covered Employees” as such term is defined in the Final

Guidance on Sound Incentive Compensation Policies issued jointly by the Board of

Governors of the Federal Reserve System with other U.S. regulatory agencies (“Federal

Reserve Guidance”) as well as material risk takers (called “Identified Staff” for the

purposes of this disclosure) as such term is defined in CRD IV).

The HRC operates according to the formal terms of its charter which are reviewed regularly

in light of best practices and take into account legal, regulatory and corporate governance

developments. The HRC’s terms of reference are documented in the HRC Charter, which is

available on Wells Fargo’s website at:

https://www08.wellsfargomedia.com/assets/pdf/about/corporate/human-resources-

committee-charter.pdf


Role of the Remuneration Committee (continued)

The HRC holds at least three regular meetings a year, and may call special meetings. During

2015, the HRC met five times. The HRC receives periodic updates on the progress of the

ICRM Program with respect to complying with regulatory expectations and requirements.

The HRC’s compensation governance framework also includes assessments of risks inherent

in executive compensation practices, including the interplay between risk-taking and

executive compensation. The HRC will continue to monitor progress so that remuneration

programmes and practices appropriately balance risk-taking consistent with applicable

regulatory guidance.

Composition of the Remuneration Committee

The HRC has a minimum of three members. All HRC members must meet the definition of a

“non-employee director” under Rule 16b-3 of the U.S. Securities and Exchange Act of 1934,

as amended from time to time, be an “outside director” for purposes of Section 162(m) of the

U.S. Internal Revenue Code, and be an independent director under the rules of the New York

Stock Exchange. The Board of Directors of Wells Fargo has determined that each current

HRC member is independent under applicable standards.

External Consultants

Under its charter, the HRC has sole authority to retain or obtain the advice of and terminate

any compensation consultant, independent legal counsel or other advisor to the HRC, and

approve their fees and other retention terms. The HRC has retained Frederic W. Cook & Co.,

Inc. (“Cook & Co.”), a recognized executive remuneration consulting firm in the United

States, to provide independent advice on executive compensation matters for 2015. Cook &

Co. provides independent guidance to the HRC on the appropriateness of Wells Fargo’s

https://www08.wellsfargomedia.com/assets/pdf/about/corporate/human-resources-committee-charter.pdf

https://www08.wellsfargomedia.com/assets/pdf/about/corporate/human-resources-committee-charter.pdf


executive compensation philosophy and principles, peer group selection, and general

executive compensation program design.

The Role of the Relevant Stakeholders

The Board of Directors of Wells Fargo, particularly through the HRC, pays careful attention

to stockholder feedback regarding remuneration. Since 2010, Wells Fargo’s lead

independent directors have participated in meetings with many of Wells Fargo’s largest

stockholders to discuss and obtain feedback on corporate governance, executive

compensation and other related issues important to these stockholders. In addition, at the

last six annual meetings of stockholders, management has solicited stockholder approval of a

non-binding resolution regarding the prior year’s remuneration of the executives named in

Wells Fargo’s Proxy Statement. Stockholders approved the resolution at each meeting,

including by a vote of 96.7%, at the 2015 annual meeting.


Decision-Making Process for Determining Remuneration Policy

Governance and Strategy: The HRC is responsible for executing the Board of Directors of

Wells Fargo’s responsibilities associated with incentive compensation risk management. As

noted above, the HRC provides overall strategy and direction, through its oversight of the

effectiveness of Wells Fargo’s incentive compensation practices.

The HRC has ultimate responsibility for all issues related to incentive compensation within

Wells Fargo including:

Establishing, in consultation with senior management, the overall strategy for the

Company with respect to incentive compensation and overseeing the Company’s

incentive compensation practices to help ensure that they are consistent with the

safety and soundness of the Company and do not encourage excessive risk-taking;

Reviewing and monitoring risk-balancing and implementation and effectiveness of

risk management methodologies relating to incentive compensation plans and

programs for members of the Operating Committee and Management Committee

Review Group and other identified employees in positions to expose the Company to

material risk;

Evaluating the effectiveness of incentive compensation strategy, policy, and

methodologies in supporting the Company’s goals; and

Approving senior executive compensation plans and any material changes to those

plans and incentive award decisions.

Policy and Oversight: During 2010, the HRC chartered the Incentive Compensation

Committee (“ICC”) to oversee Wells Fargo’s enterprise efforts to enhance incentive

compensation practices and better align incentive compensation with risk and the

expectations and guidance of regulators and other stakeholders. The ICC consists of Wells

Fargo’s senior risk, finance and human resources executives. The ICC continues to oversee


the further development and implementation of the ICRM Program, which is the key tenet of

the work to manage risk in incentive compensation arrangements throughout the Company.

The ICRM Program is designed and managed by Corporate Human Resources, with input

from an advisory council of senior managers from corporate functions and business lines,

including control functions, on development and management of the ICRM Program. The

HRC’s compensation governance framework also includes assessments of risks inherent in

executive compensation practices, including the interplay between risk-taking and executive

compensation.



Decision-Making Process for Determining Remuneration Policy (continued)

Through the ICRM Program and subject to the oversight of Corporate Human Resources, (1)

each line of business within Wells Fargo is accountable for identifying employees whose

activities, individually or as a group, may expose Wells Fargo to material risk and (2) the

management teams within Wells Fargo’s international locations are responsible for

overseeing implementation and supervision of Wells Fargo’s remuneration policies and

practices in those locations. Each line of business is responsible for understanding the risks

associated with each role covered by an incentive arrangement and making sure the

incentive arrangements of each line of business are balanced and do not encourage

imprudent risk-taking. In addition, the management teams within Wells Fargo’s

international locations are responsible for overseeing implementation and supervision of

Wells Fargo’s remuneration policies and practices in those locations.

In accordance with the ICRM Policy that was approved by the HRC in July 2011 and most

recently amended in May 2015, the ICRM Program coordinates annually an enterprise-wide

assessment of business line and corporate staff incentive compensation plans in which Wells

Fargo’s Covered Employees and Identified Staff participate. In conjunction with this annual

review process, corporate and line of business risk officers provide independent reviews of

such incentive compensation arrangements and risk-balancing features and are accountable

to the Chief Risk Officer. Currently, the HRC meets with the Chief Risk Officer annually to

review and assess any risks posed by the enterprise incentive compensation programs and

the appropriateness of risk-balancing features of those programs. The ICC and HRC have

reviewed Wells Fargo’s continued progress to implement effective incentive compensation

risk management practices through the ICRM Program, including the outcome of an

enterprise-wide risk assessment of business line and corporate staff incentive compensation

plans. The HRC will continue to monitor progress so that compensation programs and

practices appropriately balance risk-taking consistent with the safety and soundness of the

Company and applicable regulatory guidance.

The Oversight Committee oversees the operational implementation of Wells Fargo’s

remuneration policies and practices in EMEA, including for WFBI, to ensure that EMEA

and WFBI remuneration practices align with appropriate levels of risk-taking and Wells

Fargo EMEA’s and WFBI’s business strategies, objectives, values and long-term interests,

and the avoidance of conflicts of interest. The Oversight Committee reviews and monitors

Wells Fargo EMEA strategy as it relates to remuneration design for Identified Staff and those

employees performing services for WFBI who, individually or collectively, may be in

positions to expose Wells Fargo or WFBI to material risk.



Decision-Making Process for Determining Remuneration Policy (continued)

The WFBI Board is responsible for overseeing and supervising the implementation of Wells

Fargo’s remuneration policies and practices at WFBI and ensuring such policies and

practices are in compliance with applicable laws, rules, regulations and regulatory guidance.

As part of this oversight responsibility, the WFBI Board reviews and monitors the work of

the Oversight Council particularly with respect to the design and implementation of

remuneration arrangements for Identified Staff and those employees performing services for

WFBI who, individually or collectively, may be in positions to expose Wells Fargo and WFBI

to material risk. Through periodic reports from the Oversight Committee and consultation

with the CEO of WFBI (who is a member of the Oversight Council) the WFBI Board monitors

the WFBI’s remuneration policies, practices and risk management effectiveness.

Independent Assessment: Wells Fargo Audit Services (“WFAS”) provides independent

assessment of implementation of the ICRM Program in each line of business, and

compliance and documentation at both the business and corporate levels.

Identified Staff Criteria

Following the European Commission’s adoption of the EBA Regulatory Technical Standards

which set out criteria to identify categories of staff whose professional activities have a

material impact on an institution’s risk profile, a thorough review of the WFBI workforce was

undertaken to determine which roles would meet the new criteria and therefore be

considered as Identified Staff and be subject to the mandatory requirements of the CRDIV.

The resultant list of employees meeting the criteria includes all senior level management

within WFBI, those responsible for the management of the main businesses, control function

management roles and members of internal committees with material risk management

responsibilities.



Link between Pay and Performance

When designing remuneration arrangements, Wells Fargo follows four compensation

principles, each one an essential component of the Wells Fargo compensation philosophy:

1. Pay for performance – Link compensation to company, business line and individual

performance so that superior performance results in higher compensation and

inferior performance results in lower compensation.

2. Foster risk management culture – Structure compensation to promote a culture of

risk management that is consistent with the Company’s Vision and Values and

discourages imprudent risk-taking.

3. Attract and retain top executive talent – Offer competitive pay to attract, motivate

and retain industry executives with the skills and experience to drive superior long

term Company performance.

4. Encourage creation of long-term stockholder value – Use performance-based long-

term stock awards with meaningful and lasting share retention requirements to

encourage sustained stockholder value creation.

Wells Fargo considers how all elements of total remuneration work together to achieve these

principles in ways relevant to the individual employee’s role. At the enterprise level, in order

to ensure the link between pay and performance is maintained in a risk-balanced

environment, incentive compensation decisions take into account a number of quantitative

and qualitative measures as determined by the HRC and senior management. Discretionary

arrangements must include risk-management performance objectives focusing on the quality

of the quantitative performance measures. A key element of linking pay and performance on

an individual level is a performance assessment framework that evaluates performance from

financial and non-financial perspectives. The exercise of informed discretion consistent with

corporate guidelines plays an important role in the assessment of performance and risk-

balancing in the design of many of Wells Fargo’s incentive plans.

In making remuneration decisions for Wells Fargo’s executive officers, the HRC operates

within a governance structure that assists the HRC in implementing the remuneration

principles described above. The HRC applies its discretion in taking into account all aspects

of Wells Fargo’s remuneration framework when making its remuneration decisions. Key

attributes of this compensation governance framework, in addition to HRC discretion,

include: Company performance; peer group analysis as to both compensation and financial

performance; business line performance; individual performance; independent

compensation consultant advice; and risk management.



Link between Pay and Performance (continued)

Wells Fargo believes that equity awards most closely align employee interests with

shareholder interests over the long term. A significant portion of the long-term incentive

opportunities for Wells Fargo’s executive officers and other most senior managers is

provided in the form of performance shares that vest over three years based on Wells Fargo’s

performance over that period. For other members of Wells Fargo management and other

Wells Fargo employees, Wells Fargo issues restricted share right grants that typically vest

over three to five years. Because the value of the restricted share rights is based on Wells

Fargo’s stock price performance, the awards further align incentives with the long-term

performance of Wells Fargo.

Design and Structure of Remuneration

Wells Fargo’s remuneration policy is consistent with and promotes sound and effective risk

management, does not encourage excessive risk-taking, includes measures to avoid conflicts

of interest, and is in line with Wells Fargo’s business strategy, objectives, core values, and

long-term interests. The individual elements of key employees’ remuneration packages are

fixed pay (base salary, fixed allowance and other employee benefits), performance-related

incentive opportunities (variable incentives), and long-term incentive opportunities. The size

of the various remuneration elements will differ, dependent upon the nature of an

individual’s role, so that the overall remuneration package is competitive, relevant,

performance-enhancing and appropriately risk-balanced.

Wells Fargo’s variable remuneration arrangements are reviewed for balance. “Balancing

Features” are mechanisms in variable remuneration design that align an employee’s short-

term incentives with the long-term strength and stability of Wells Fargo. Potential Balancing

Features include, but are not limited to, disqualifiers from incentive eligibility, discretionary

arrangements with a risk performance objective, risk adjustments of variable remuneration

awards based on judgment or metrics, maximum payout limits, diminishing marginal

payouts, longer performance periods, deferrals with performance-based vesting, and

adjustment to the allocation between base salary and variable remuneration.

Balancing Features should greatly reduce or eliminate asymmetric outcomes between an

employee and Wells Fargo. Wells Fargo seeks to conform Balancing Features in any given

variable remuneration arrangement to be appropriate to the job relevant risk, including

considering the dynamics of the role if an employee is an individual contributor or a member

of a team. In addition, job relevant risk and the use of Balancing Features differ meaningfully

between management who are in annual discretionary arrangements and revenue producers

whose remuneration may be more weighted towards formulaic arrangements.



Design and Structure of Remuneration (continued)

For senior management, where long-term incentive plans are key components of variable

remuneration, Wells Fargo evaluates Balancing Features in the context of total remuneration

– the use of annual and long-term incentives, and the terms of the incentive awards

(including types of instruments used, performance criteria and deferral features). For

revenue producers, whose primary focus is to generate revenue in the current period, Wells

Fargo evaluates the use of appropriate Balancing Features in their annual incentive plans.

Key elements of Wells Fargo’s remuneration structure

Fixed Remuneration (Base Salary, Fixed Allowance and Benefits): Base salary is paid in

cash. The purpose of providing a base salary is to attract, retain and motivate talent in a

competitive market. As such, base salaries are determined by competitive market conditions

for the specific market for the business in which an individual works and the skills and

experience that the individual brings to the business in which they work. Base salaries are a

fixed amount reviewed annually, and are designed to be an appropriate portion of total

compensation to avoid encouraging inappropriate risk-taking. Non-cash benefits and, on a

limited basis, allowances paid in cash may be provided to employees as part of an overall

competitive remuneration package.

In a small number of cases, a Fixed Allowance has been paid in 2015 for Identified Staff

subject to the Bonus Cap (following introduction of the Fixed Allowances in 2014). These

allowances are consistent in design with the Opinion of the European Banking Authority on

the application of CRD IV regarding the principles on remuneration policies of credit

institutions and investment firms and the use of allowances.

Variable Remuneration: Variable remuneration may be paid in cash or equity, and both

forms of payment may be subject to a vesting or deferral period. The purpose of providing

variable remuneration opportunities is to incentivise the attainment of performance goals at

the company, line of business, team and individual levels. Specific and measurable metrics

(financial and non-financial) are set for the performance year and communicated to

employees. Robust design principles and rigorous governance procedures are applied so that

there is an appropriate balance between short-term performance goals and the long-term

strength and stability of Wells Fargo. Criteria used in determining performance and the risk

adjustment process described as ‘Balancing Features’ above may include credit-related

performance measures, revenue-related performance measures and productivity measures

as well as direct assessment of risk and compliance considerations. Key design

characteristics include performance metrics that reflect an emphasis on the overall

performance of Wells Fargo, and for lines of business, their contribution to Wells Fargo’s

overall performance; productivity measures reflecting an emphasis on quality through an

individual focus on compliance and appropriate risk-management practices aligned with the



Key elements of Wells Fargo’s remuneration structure (continued)

Company’s risk appetite; and strong discretionary authority to adjust or eliminate variable

opportunities based on risk outcomes.

Long-Term Incentives: Long-term incentives are generally paid in equity and are subject to

the approval of the HRC. Consistent with Wells Fargo’s performance-based culture, long-

term incentive awards align management and employee interests through sustained growth

in stockholder value. The form (i.e., performance shares, restricted share rights, stock

options or other designated forms of equity) and terms of the awards (including the vesting,

performance and forfeiture provisions) are determined by the HRC. Typically, awards vest

over three to five years, provided the awards have not been forfeited in accordance with their

terms. Delivery of vested equity awards is generally in shares of Wells Fargo common stock.

For 2015, the HRC continued its use of long-term performance share awards for a broader

group of senior management, which may include certain Identified Staff, and reaffirmed

Wells Fargo’s approach of deferring a portion of annual incentive compensation for the

highest earners in the form of long-term awards whose vesting terms take into account

longer risk-emergence periods.

Deferrals and Vesting: The vesting of deferred annual variable remuneration and long-term

incentives is subject to the terms of the award which may include continued employment,

satisfaction of share retention requirements following vesting or exercise, continued

compliance with Wells Fargo’s Code of Ethics and Business Conduct, Wells Fargo’s Risk

Management Accountability Policy and other Wells Fargo policies, and other performance

and risk criteria designated by the HRC or Wells Fargo business units from time to time.

Deferred awards may be provided in the form of cash, equity or a combination thereof.

For 2015, WFBI determined it appropriate to apply the principle of proportionality in respect of

the following elements of the CRD IV and associated guidelines such that they are not part of the

policy applied by WFBI:

The requirement to pay at least 50% of total variable remuneration as a combination

of shares and contingent capital;

The requirement to defer 40% to 60% of any variable remuneration for three to five

years; and;

The requirement that variable remuneration can only vest if it is sustainable

according to the financial situation of the credit institution as a whole, and justified

according to the performance of the credit institution, the business unit and the

individual concerned (i.e., a claw-back provision).

The requirement to establish a Remuneration Committee.



Key elements of Wells Fargo’s remuneration structure (continued)

In 2014, WFBI implemented the bonus cap as set out in CRD IV and, in accordance with

Article 94(1)g(ii) of CRD IV, following WFBI shareholders’ approval of the maximum level of

the ratio between the fixed and variable components of remuneration such that the overall

level of the variable component shall not exceed 200 % of the fixed component of the total

remuneration for each Identified Staff member. This policy was also adopted for 2015.

Remuneration Expenditure

The following table shows remuneration paid to 2015 WFBI Identified Staff who are

remunerated for their services to WFBI. Variable remuneration for 2015 performance was

paid or awarded in 2016.

Fixed and Variable Remuneration

Table 23:

Remuneration Type

Senior

Management Other

Fixed Remuneration 2,010 2,116

Variable Remuneration 1,654 1,523

of which:

- cash bonus 1,189 1,195

- deferred long term cash 213 151

- deferred shares 252 177

Number of Identified Staff 6 10

Identified Staff 2015 €000's



Aggregate remuneration by business area

The following table shows aggregate remuneration paid to 2015 WFBI Identified Staff who

are remunerated for their services to WFBI. Variable remuneration for 2015 performance

was paid or awarded in 2016.

Table 24:

Deferred Remuneration

The following table provides a summary of deferred remuneration for 2015 WFBI Identified

Staff who are remunerated for their services to WFBI.

Table 25:

One severance payment was made to an Identified Staff in 2015. No sign on payments were made to Identified Staff in 2015. Two Identified Staff received total remuneration of between €1m and €1.5m. The information contained in these disclosures has not been audited and does not constitute a financial statement of WFBI or Wells Fargo.

Corporate

Banking

Securities and

Global

Banking Suppport

Total Remuneration 5,250 1,158 895

Number of Identified Staff 8 4 4

Identified Staff 2015 €000's


Appendix I: WFBI Risk Appetite Statement metrics

Metric

Reporting

Frequency to the

Board

Losses 1. Trailing four quarter losses as % of portfolio loan outstandings Quarterly

2. Weighted average AQR (by portfolio loan commitments) Quarterly

3. Criticised/ Classified as a % of Tier 1 Capital Quarterly

4. NPA's as a % of portfolio loan outstandings Quarterly

5. No increase to existing commitments Quarterly

6. Trailing four quarter losses as % of legacy loan outstandings Quarterly

7. No breaches to the Asset Class Concentration Limits Quarterly

8. No breaches to the Country Concentration Limits Quarterly

Credit Risk Metrics

Asset Quality

Legacy

Concentration Risk

Credit Grade

Migration Risk

9. Credit Grade Migration Risk Capital Reserve as a % of Tier 1 Capital

Requirement

Quarterly

Metric

Reporting to

Board

Frequency

1. One-day 99% Value at Risk Quarterly

2. One-day 99% Expected Shortfall Quarterly

3. Q4 2008 Financial Crisis Quarterly

4. Fed Taper Fear Quarterly

Sensitivities 6. Total FX Exposure Quarterly

7. IRRBB (IR01) Quarterly

8. Earnings Sensitivity QuarterlyInterest Rate Risk

in the Banking Book

Market Risk Metrics

Historical Stresses

Value at Risk

Metric

Reporting to

Board

Frequency

Regulatory Ratios 1. Sight to 8 days -cash inflows in period/cash outflows in period Quarterly

2. Over 8 days -cash inflows in period/cash outflows in period Quarterly

3. Liquidity Coverage Ratio (LCR) Quarterly

4. Net Stable Funding Ratio (NSFR) Quarterly

Liquidity Risk Metrics


Appendix I: WFBI Risk Appetite Statement metrics (continued)

Metric

Reporting

Frequency to the

Board

Opeational Losses

1. Annual Operational losses shall remain under 2% of revenue measured

on a rolling 12 monthsQuarterly

3. There will be no repeat high risk issues identified during audits and no

repeat very high or high risk issues identified during regulatory

examinations occurring within the quarter

Quarterly

4. There will be no repeat issues to very high risk issues identified during

internal reviews occurring within the quarterQuarterly

5. No past due EMEA information security actions that are high or critical

risk, in the Security Planning and Assessment of Risks ans Control system,

past due at the quarter.

Quarterly

Human Resources 6. Turnover of Pre-approved Controlled Function (PCF) & Controlled

Function (CF) headcount as a % of the total PCF/CF population (excl.

Board) in the previous quarter.

Quarterly

Operational Risk Metrics

Assessment Results 2. There will be no unsatisfactory audits measured over a rolling four

quarters

Quarterly

Corrective Actions


This document and any other materials accompanying this document (collectively, the “Materials”) are provided for information

only. By accepting the Materials, the recipient acknowledges and agrees to the matters set forth below in this notice.

Wells Fargo & Company provides banking and financial services in Europe through its subsidiaries. Banking services are primarily

provided through Wells Fargo Bank International (WFBI) and Wells Fargo Bank N.A., London Branch (WFBNA) which is which is

authorized by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and Prudential Regulation

Authority, Investment services are primarily provided through Wells Fargo Securities International Limited (WFSIL) which is

authorized and regulated by the UK Financial Conduct Authority.

Wells Fargo Europe makes no representation or warranty (express or implied) regarding the adequacy, accuracy or completeness of

any information in the Materials. Information in the Materials is preliminary and is not intended to be complete, and such

information is qualified in its entirety. The views expressed in the Materials do not necessarily reflect the views of Wells Fargo &

Company or its affiliates. The information in the Materials is based upon diverse sources that Wells Fargo Europe believes to be

reliable, though the information is not guaranteed. The views and forecasts are subject to change without notice.

The materials are distributed by WFBI which is primarily regulated by the Central Bank of Ireland and is registered as an EEA

Authorised Firm with the United Kingdom’s Financial Conduct Authority and with the German Federal Financial Supervisory

Authority (BaFin).

The Materials are not an offer to sell, or a solicitation of an offer to buy, the securities or instruments named or described herein.

The Materials are not intended to provide, and must not be relied on for, accounting, legal, regulatory, tax, business, financial or

related advice or investment recommendations. No person providing any Materials is acting as fiduciary or advisor. You should

consult with your own advisors as to the legal, regulatory, tax, business, financial, investment and other related matters.

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