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È la risposta del direttore finanziario ad una domanda sulle preferred , in dollari ci sono 4 pref in post call
It's Martin Leitgeb from Goldman. I have two questions, please. The first, on capital and your guidance on capital, and I'm just struggling to add them together here. So we are starting at an 11.4% core Tier 1; then, obviously, Africa is going to lift that, depending on execution price, by around 80 basis points, roughly. If I then tie in the guidance on non-core, so an incremental 35 billion RWA reduction by 2017 that mechanically already gets me to north of 13% core Tier 1. You mentioned earlier that the core bank is profit making, I think, at a pace of roughly 3.5 billion to 4.5 billion at the moment.
Just doing these numbers, do you imply there is some substantial loss somewhere else to come, so either the exit losses, which you pin-point at roughly 1 billion incrementally; or it leaves room for substantial fines or litigation? Or is there anything else missing? Is there any consideration on the preference shares? Or which part are we missing, or is it just a conservative guide?
The second question then is on the ring-fenced entity. You disclosed a loan-to-deposit ratio of 95%. To what extent is that a going-forward ratio? Should we think of a steady state loan-to-deposit more towards 110? And what does that imply for the future set-up of the ring-fence? Do you have space to shrink branches substantially because you have too many deposits at the moment?
Jes Staley
I'm going to pass to Tushar. The only thing I'd say is, if you can remember, the objective of the reduction in the dividend in 2016, 2017 is to accelerate the elimination of non-core, which will bring losses forward. But with that, pass it to Tushar.
Tushar Morzaria
Yes, Jes is right. You've got to think about the timeline trajectory. You're right in terms of the sale of Africa should be very capital-accretive, but we're in no rush to sell that. We'll sell that at the right time, at the right price. And all the options are available to us, whether that's a strategic sale, private placement, sales in to equity market or of any combination of them. We'll look to see what the best opportunities are. But you only get the capital benefit once you deconsolidate. And regulatory deconsolidation, I think, will happen at below 20%, so there's still some time to go before then.
Between now and then of course we'd like to accelerate the wind-down of our non-core unit. And the capital that we save, if you like, from the dividend adjustments will be helpful to that. We've guided towards a meaningful negative income in 2016 as we wind down the asset sales and business sales, and also guided to some increase in costs in non-core. So that balances our capital position as we go through this journey. We should accrete capital in both well certainly in 2016, and beyond; and we should comfortably get above any minimum requirements that are there for us. But don't lose sight of the timing of when the dividend and the Africa benefits come through.