Regulatory Bank Capital and Basel Rules

These pages keep prudential capital concepts together so readers can connect risk-weighted assets, Basel frameworks, capital ratios, and loss-absorbing bank capital.

In this section

• Bank Capital Components
  Risk-management terms for CET1, Tier 1, Tier 2, tier capital, and retained bank capital components.
  • Common Equity Tier 1 (CET1): Comprehensive Definition and Calculation
    An in-depth examination of Common Equity Tier 1 (CET1), a crucial component of Tier 1 capital primarily consisting of common stock held by financial institutions. Learn about its definition, calculation, historical significance, applications, and related terms.
  • Tier 1 Capital: Definition, Key Components, Ratio Calculation, and Practical Applications
    A comprehensive guide to Tier 1 Capital, detailing its definition, key components, ratio calculation, and practical applications in banking.
  • Tier 2 Capital: Definition, Components, and Inclusions
    A comprehensive guide on Tier 2 Capital, its definition, core components such as revaluation reserves, undisclosed reserves, hybrid instruments, and subordinated term debt, and their inclusions in financial systems.
  • Tier Capital: Different Classes of Bank Capital
    Tier Capital refers to different classes of bank capital, with Tier 1 being the core capital consisting of common equity and disclosed reserves.
  • Undivided Profit: An Essential Component of Bank Balance Sheets
    A comprehensive look into Undivided Profit, a crucial element on a bank's balance sheet representing profits that have neither been paid out as dividends nor transferred to the bank's surplus account.
• Basel Accords And Supervisory Capital Rules
  Risk-management terms for Basel accords, supervisory capital adequacy, regulatory capital, and risk-based capital requirements.
  • Basel Agreement: International Banking Standards
    The Basel Agreement established international risk-based capital adequacy standards for banks, ensuring a level playing field in global banking and enhancing financial stability.
  • Basel I: The Initial Basel Accord on Credit Risk
    Basel I focuses primarily on credit risk management, establishing the first set of international banking regulations to ensure financial stability and minimize risks in the banking sector.
  • BASEL II: The Second Basel Agreement on Capital Adequacy
    An international standard for banking regulators published in June 2004, aimed at creating guidelines on capital adequacy to ensure that financial institutions hold enough capital to cover risks.
  • Capital Adequacy: Measuring Financial Stability
    Capital Adequacy is a measure of a bank's or financial institution's capital to ensure it can absorb potential losses and safeguard depositors' funds.
  • Regulatory Capital: Key Element in Financial Stability
    An exploration of Regulatory Capital, its historical context, categories, key events, importance, and applicability, including mathematical models, examples, and related terms.
  • Risk-Based Capital Requirement: Meaning and Example
    Risk-Based Capital Requirement is a finance-focused reference term for regulation, risk, capital, or market analysis.
• Risk-Weighted Assets And Capital Ratios
  Risk-management terms for RWA, risk weights, leverage ratios, tangible common equity, and Tier 1 ratio measures.
  • Risk Weight: The Weight Assigned to an Asset Based on Its Risk Level
    Risk Weight is a term used in the context of financial regulations, representing the capital required to ensure a bank can absorb potential losses from different asset classes.
  • Risk-Weighted Assets (RWA)
    Risk-weighted assets are bank exposures weighted by regulatory risk factors for capital adequacy analysis.
  • Tangible Common Equity (TCE): Comprehensive Definition, Calculation Methods, and Real-World Examples
    An in-depth exploration of Tangible Common Equity (TCE), its definition, methods of calculation, real-world examples, historical context, applicability, comparisons, related terms, and frequently asked questions.
  • Tier 1 Capital Ratio: Definition, Formula, and Example
    Tier 1 Capital Ratio is a finance-focused reference term for regulation, risk, capital, or market analysis.
  • Tier 1 Common Capital Ratio: Definition, Importance, and Examples
    A comprehensive guide to understanding the Tier 1 Common Capital Ratio, its significance in banking, how it is calculated, and real-world examples.
  • Tier 1 Leverage Ratio: Definition, Formula, Calculation, and Example
    Learn about the Tier 1 Leverage Ratio, a key financial metric used to assess a bank's core capital relative to its total assets, including its definition, formula, calculation method, and a comprehensive example.