What is Total Capital Ratio?
Total Capital Ratio The ratio of a bank's total capital (Tier 1 and Tier 2) to its risk-weighted assets, as defined under Basel III and CRR/CRD, used to assess capital adequacy and regulatory compliance.
Source: CFA Institute, IFRS Foundation, FASB (GAAP), Basel III Framework
How is “Total Capital Ratio” Used in Practice?
Banks are required to maintain a minimum total capital ratio to ensure they have sufficient capital to cover their risk-weighted assets.
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Who Needs to Know This Term?
- Financial Analysts
- Bankers
- Traders
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What is Total Capital Ratio?
The ratio of a bank's total capital (Tier 1 and Tier 2) to its risk-weighted assets, as defined under Basel III and CRR/CRD, used to assess capital adequacy and regulatory compliance.
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