Tier 1 Common Capital Ratio
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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%.
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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.
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Search results for 'Tier 1 Common Capital Ratio'
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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 ...
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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 ...
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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%. ...
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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 ...
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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%. ...
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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%. ...
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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 ...
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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 ...
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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 ...
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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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