Tier 1 Leverage Ratio

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Dictionary Says

Definition of 'Tier 1 Leverage Ratio'

The relationship between a banking organization's core capital and total assets. The Federal Reserve develops capital adequacy guidelines for bank holding companies. The Tier 1 leverage ratio is calculated by dividing Tier 1 capital ratio by the firm's average total consolidated assets. The Tier 1 leverage ratio is an evaluative tool used to help determine the capital adequacy and to place constraints on the degree to which a banking firm can leverage its capital base.
Investopedia Says

Investopedia explains 'Tier 1 Leverage Ratio'

Strong bank holding companies, rated composite 1 under the BOPEC (Bank subsidiaries, Other subsidiaries, Parent, Earnings, Capital) rating system of bank holding companies, must have a Tier 1 leverage ratio of 3%. For all other banks, the minimum ratio is 4%. Any banking organizations that have supervisory, financial, operational or managerial difficulties are expected to maintain capital ratios above the minimum levels. In addition, bank firms that are expecting or going through significant growth are expected to maintain ratios well above the minimum levels as a hedge against risk.
Search results for

'Tier 1 Leverage Ratio'

  • Colonial BancGroup Selloff An Overreaction

    http://stocks.investopedia.com/stock-analysis/2008/Colonial-BancGroup-Selloff-An-Overreaction-CNB1029.aspx
    ... Colonial BancGroup reported a Tier 1 Leverage ratio of 7.29%, a Tier 1 Risk-Based
    Capital ratio of 10% and a Total Risk-Based Capital ratio of 14.17%. ...

  • Canadian Banks Rule

    http://stocks.investopedia.com/stock-analysis/2009/Canadian-Banks-Rule-BOM-TD-BNS-RY-CM0527.aspx
    ... to much more stringent capital standards, with tier 1 capital ratios far in excess
    of the minimum required ratio of 7.0%. Also, the leverage ratio is limited ...

  • 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%. ...

  • First-Quarter S&P Losers

    http://stocks.investopedia.com/stock-analysis/2011/First-Quarter-SP-Losers--MWW-AIG-HCBK-FFIV0404.aspx
    ... Hudson City Bancorp said that there would be no impact on its Tier-1 leverage
    capital ratio, which the bank expects to reach 8%. ...

  • The Banking System: Commercial Banking - How Banks Are Regulated ...

    http://www.investopedia.com/university/banking-system/banking-system6.asp
    ... requirement for common equity (4.5% versus 2%), increase Tier 1 capital requirements
    by 50% (from 4 to 6%), introduce a minimum 3% leverage ratio, and create ...

  • Assessing Bank Assets: Are Your Savings Safe?

    http://www.investopedia.com/articles/fundamental-analysis/09/assessing-bank-assets.asp
    ... Regulators establish capital ratio guidelines to control the leverage a bank may
    safely have. Most banks and regulators use Tier 1 capital ratio to measure the ...

  • Is Bank Of America Stock Undervalued?

    http://stocks.investopedia.com/stock-analysis/2010/Is-Bank-Of-America-Stock-Undervalued-BAC-XLF-JPM-WFC-GS-C1122.aspx
    ... equity increased by 12.7% and the tier 1 common equity ... its long term debt to total
    assets ratio stands at ... The risks of excess leverage have been slowly emerging ...

  • Banks Battle Higher Capital Standards

    http://stocks.investopedia.com/stock-analysis/2011/Banks-Battle-Higher-Capital-Standards-JPM-BAC-C-AIG1018.aspx
    ... regulations are known as Basel III, and they impact capital levels, leverage,
    disclosure and risk ... Basel III established a Tier 1 common ratio minimum of ...

  • Banking Stress Tests: Would Yours Pass?

    http://www.investopedia.com/articles/fundamental-analysis/09/banking-stress-tests.asp
    ... a bank's risk-weighted credit exposure by measuring a bank's Tier 1 an Tier 2 capital ...
    Simply put, this is leverage and works rather well for juicing returns ...

  • America's Best Banks Of 2006: A Look Back

    http://stocks.investopedia.com/stock-analysis/2011/Americas-Best-Banks-Of-2006-A-Look-Back-CBSH-GBCI-CYN-PRK-SNV-USB0909.aspx
    ... strength using Tier 1 capital and leverage ratios. The final criteria involved asset
    quality measures including nonperforming asset ratio and reserve coverage. ...

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