Tier 1 Common Capital Ratio

Dictionary Says

Definition of 'Tier 1 Common Capital Ratio'

A measurement of a bank's core equity capital compared with its total risk-weighted assets. This is the measure of a bank's financial strength. The Tier 1 common capital ratio excludes any preferred shares or non-controlling interests when determining the calculation. This differs from the Tier 1 capital ratio which is based on the sum of its equity capital and disclosed reserves, and sometimes non-redeemable, non-cumulative preferred stock. A firm's risk-weighted assets include all assets that the firm holds that are systematically weighted for credit risk. Central banks typically develop the weighting scale for different asset classes, such as cash and coins, which have zero risk, versus a letter or credit, which carries more risk. The risk-weighted assets essentially measure the firm's assets in terms of risk, typically in terms of 0%, 20%, 50% or 100%.
Investopedia Says

Investopedia explains 'Tier 1 Common Capital Ratio'

Regulators use the Tier 1 common capital ratio to grade a firm's capital adequacy as one of the following rankings: Well-Capitalized, Adequately Capitalized, Undercapitalized, Significantly Undercapitalized, and Critically Undercapitalized. A firm must have a Tier 1 capital ratio of 6% or greater and not pay any dividends or distributions that would affect its capital to be classified as Well-Capitalized. A firm is Adequately Capitalized with a Tier 1 ratio of 4% or more; Undercapitalized below 4%, Significantly Undercapitalized below 3%, and Critically Undercapitalized at 2% or below. Firms that are ranked Undercapitalized or below are prohibited from paying any dividends or management fees. In addition, they are required to file a capital restoration plan.
Search results for

'Tier 1 Common Capital Ratio'

  • Is Your Bank On Its Way Down?

    http://www.investopedia.com/articles/fundamental-analysis/09/tier-1-capital-ratio.asp
    ... The higher the Tier 1 ratio, the safer the bank ... because it is not purely common equity ...
    investors, many publications regularly publish Tier 1 Capital figures for ...
  • Banks Battle Higher Capital Standards

    http://stocks.investopedia.com/stock-analysis/2011/Banks-Battle-Higher-Capital-Standards-JPM-BAC-C-AIG1018.aspx
    ... argues that if banks are required to hold more capital, then systemic risk may shift
    to less regulated sectors. Citigroup reported a Tier 1 common ratio of 11.7 ...
  • Assessing Bank Assets: Are Your Savings Safe?

    http://www.investopedia.com/articles/fundamental-analysis/09/assessing-bank-assets.asp
    ... There is no established regulatory ratio for tangible common equity. Capital Ratios
    (period end), Current Year, Prior Year. Tier 1, 10.09%, 7.51%. ...
  • How Basel 1 Affected Banks

    http://www.investopedia.com/articles/07/BaselCapitalAccord.asp
    ... Figure 1: Basel's Classification of risk weights of on-balance ... also adds the possibility
    of a third tier for the ... In other words, it assumes a common market to ...
  • Banking Sector Still Dealing With Problem Loan Issue

    http://stocks.investopedia.com/stock-analysis/2009/Banking-Sector-Still-Dealing-With-Problem-Loan-Issue-MI-SNV-FBG0902.aspx
    ... The net effect was to increase common equity by $249 million, and leaves the
    bank with a pro forma Tier 1 leverage capital ratio of 11.22%. ...
  • Bank Of America's Story Not About Lousy Earnings

    http://stocks.investopedia.com/stock-analysis/2012/Bank-Of-Americas-Story-Not-About-Lousy-Earnings-BAC-C-USB-WFC-PNC0123.aspx
    ... condition. Management is shrinking the balance sheet and the Tier 1 common
    capital ratio did improve notably - up 1.21% to 9.86%. ...
  • JP Morgan Q1 2011 Earnings Review

    http://stocks.investopedia.com/stock-analysis/2011/JP-Morgan-Q1-2011-Earnings-Review-JPM0418.aspx
    ... Levels JP Morgan Chase saw a continued improvement in capital ratios in the first
    quarter of 2011, with the bank's Tier 1 common capital ratio improving to 10 ...
  • Can SunTrust Be Trusted?

    http://stocks.investopedia.com/stock-analysis/2009/Can-SunTrust-Be-Trusted-STI-JPM-PNC0910.aspx
    ... $2.3 billion in capital through the issuance of common shares and sale of its remaining
    Visa (NYSE:V) shares. These moves pushed the Tier 1 capital ratio up to ...
  • The Banking System: Commercial Banking - Key Ratios/Factors ...

    http://www.investopedia.com/university/banking-system/banking-system9.asp
    ... Growth As previously discussed, deposits are the most common, and almost ... A bank's
    Tier 1 capital ratio takes a bank's equity capital and disclosed reserves and ...
  • How PIIGS Defaults Could Affect The Markets - Investopedia.com

    http://financialedge.investopedia.com/financial-edge/1111/How-PIIGS-Defaults-Could-Affect-The-Markets.aspx
    ... (To learn more about how the Tier 1 Capital Ratio measure a bank's health, check
    out Is Your Bank On Its Way Down?) Sovereign Debt This brings us to bank ...

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