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Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. [ note 1 ] It is composed of core capital , [ 1 ] which consists primarily of common stock and disclosed reserves (or retained earnings ), [ 2 ] but may also include non-redeemable non-cumulative preferred stock .
Basel III: Finalising post-crisis reforms, sometimes called the Basel III Endgame in the United States, [1] [2] Basel 3.1 in the United Kingdom, [3] or CRR3 in the European Union, [4] are additional changes to international standards for bank capital requirements that were agreed by the Basel Committee on Banking Supervision (BCBS) in 2017 as part of Basel III, first published in 2010.
A capital requirement (also known as regulatory capital, capital adequacy or capital base) is the amount of capital a bank or other financial institution has to have as required by its financial regulator. This is usually expressed as a capital adequacy ratio of equity as a percentage of risk-weighted assets.
Because of its two-step aggregation, capital allocation between trading desks (or even asset classes) is challenging; thus making it difficult to fairly calculate each desk's risk-adjusted return on capital. Various methods are then proposed here. [3]
Ontario Today is a Canadian talk radio program on CBC Radio One. The program is broadcast live from the studios of CBO-FM in the CBC Ottawa Broadcast Centre weekdays, and it is carried on all CBC Radio One transmitters in Ontario .
It is commonly represented as total assets less current liabilities (or fixed assets plus working capital requirement). [2] ROCE uses the reported (period end) capital numbers; if one instead uses the average of the opening and closing capital for the period, one obtains return on average capital employed (ROACE). [citation needed]
CCA itself is generally calculated using the following items: CCA = capital cost allowance for the current fiscal period UCC = undepreciated capital cost before claiming CCA in the current fiscal period t = the proportion of days in the current fiscal period vs a normal fiscal period, if the current fiscal period is a stub, otherwise 1