Okay. You’re right, on the underlying costs, that’s the cost before variable compensation, we were a tad below the 20 billion francs run rate, so just below 5 billion francs in the quarter. It wasn’t much below, but it was at least below.
On Wealth Management revenues, I think the single biggest item affecting revenues in the quarter was the cost of the liquidity buffer. We showed that the margin was down by four basis points and the liquidity buffer itself was a couple of those and that won’t recur in Q4.
The reason we charged the liquidity buffer to this division, to be quite frank, was because our regulators were wary about us taking down the size of the buffer while the John Doe summons issue had not been settled. And as a consequence, it was the only division or the principle division that was holding up the buffer, so we charged the excess cost to that division under our internal cost allocation mechanisms.
We’ve now taken down the buffer because we came to a settlement on the John Doe summons and in any case the cost of the liq buffer is diminishing as the yield curve out to one year flattens in all the major currencies. So that will be an obvious immediate reversal of that revenue effect.
The other was this write-down on the property fund, which we’d hope not to have to take again in Q4. This is a historical issue stemming back to Q4 last year where we bought some units in the property fund given the redemption cue from clients and we took a valuation adjustment on that essentially in the quarter.
The bigger impact on Wealth Management was on the expense base where there was – of the expenses there’s a good 250 million francs or so which is certainly one-off because it’s the catch–up effect on the change in the way that we manage the compensation, for that division in particular, but across the Group. It most prominently affects that division.
Essentially what we did was we moved the threshold at which we start paying deferred compensation in stock, up and that took a whole swathe of people in Swiss Bank and in Wealth Management out of the equation and therefore the accrual, we’d made for their deferred compensation was brought back and charged to this year because it would now be paid in the 2009 bonus round in cash.
The RWAs, I didn’t mention, I didn’t repeat myself on Q2 although what I said then still applies. The BIS has come out with the new algorithm for adjusting the regulatory VaR to convert it into a notional number of RWAs. And essentially, it would multiply the RWA number by a factor something like 2.5 to 3.
Now, in the quarter, we managed to take down our market-risk framework RWAs by 6 billion francs or so and that’s because we’ve been working on the system’s capability to apply CVAs to our derivatives exposures which were the bulk of that. And as a consequence, I think it’s 16 billion francs, Philip?
Philip Higson
16.3 billion francs.
John Cryan
16.3 billion francs is the RWA number attaching to the market–risk framework. So the delta, if you take – if you multiply it by three, then you get to – its equal to 50 billion francs as opposed to 50 billion francs, which is nearer where it was before. So maybe that’s come down a tad but that’s only because we’ve had low regulatory VaR, which, again, I would like to see our regulatory VaR go up a bit because I’d like to see us put more risk on the table and actually trade a bit harder. So it’s of the order of magnitude that I mentioned in Q2.
Fiona Swaffield – Execution
But in terms of the net impact, sorry, the 10% down in risk-weighted assets?
John Cryan
Yes.
Fiona Swaffield – Execution
Overall, that’s still the same?
John Cryan
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