Tier 1 capital
BankingDefinition
A bank's core regulatory capital — common equity + retained earnings + qualifying preferred. Measured against risk-weighted assets to determine the Tier 1 ratio.
Basel III minimum: 6% Tier 1 capital ratio + 2.5% conservation buffer. US "stress capital buffer" can push that to 11-13% for largest banks. Higher = more cushion for losses, but also lower ROE.
Basel III minimum: 6% Tier 1 capital ratio + 2.5% conservation buffer. US "stress capital buffer" can push that to 11-13% for largest banks. Higher = more cushion for losses, but also lower ROE.