Transcription of Minimum Capital Requirements
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Minimum Capital Requirements
12 Part 2: The First Pillar Minimum Capital Requirements I. Calculation of Minimum Capital Requirements 40. Part 2 presents the calculation of the total Minimum Capital Requirements for credit, market and operational risk. The Capital ratio is calculated using the definition of regulatory Capital and risk-weighted assets. The total Capital ratio must be no lower than 8%. Tier 2 Capital is limited to 100% of Tier 1 Capital . A. Regulatory Capital 41. The definition of eligible regulatory Capital , as outlined in the 1988 Accord and clarified in the 27 October 1998 press release on Instruments eligible for inclusion in Tier 1 Capital , remains in place except for the modifications in paragraphs 37 to 39 and 43. The definition is outlined in paragraphs 49 (i) to 49 (xviii) and in Annex Ia.
The Committee considers that the key element of capital on which the main emphasis should be placed is equity capital13 and disclosed reserves. This key element of capital is the only element common to all countries' banking systems; it is wholly visible in the published accounts and is the basis on which most market judgements of capital adequacy
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