CAMELS Rating System

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CAMELS Rating System

A mnemonic device for the factors by which regulators determine banks' riskiness. The rating system goes on a scale from one to five, with one showing the least risk and five the most risk. The factors break down as follows:

C - Capital Adequacy
A - Quality of Assets
M - Quality of Management
E - Earnings
L - Liquidity
S - Sensitivity of the Bank to Market Risk
References in periodicals archive ?
Last July, Dominguez gave all national government agencies, government-owned and/or -controlled corporations (GOCCs) or local government units (LGUs) that maintain accounts with banks that do not have a universal bank license and a Camels rating of at least '3' until June 30 next year to transfer all their cash balance and funds to compliant GFIs through DC 2-2016.
The CAMELS rating system is used to evaluate banks on their capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to interest rate risk.
He has further said that the interest rate will be settled taking CAMELS rating of the individual banks into account.
The FDIC, the OCC and the Board of Governors of the Federal Reserve System began using the CAMELS rating system on Jan.
Not all of the appeals seeking a change in a CAMELS rating disclosed the rating the bank had received, but many did.
Ludwig pointed out, "Still in the US it is a criminal violation of law for anyone to disclose a CAMELS rating [assigned based on a ratio analysis of financial statements, combined with on-site examinations.
10) An innovation that changes a bank's supervisory CAMELS rating or policy changes that alter a bank's optimal capital or liquidity position will impact loan growth in a manner consistent with sample-average deviations of the CAMELS coefficients and the capital and liquidity coefficient estimates in our bank fixed-effects specification.
Ratings are deduced from a system commonly known as the CAMELS rating system.
The CAMELS rating is an aggregate measure on a scale of 1 (best) to 5 (worst), based on capital adequacy (C), asset quality (A), management quality (M), earnings (E), liquidity (L), and sensitivity to market risk (S).
Our criterion for strong performance is maintaining the highest supervisory rating, a composite CAMELS rating of 1, during the years 2006 through the end of 2011; we refer to this condition as "thriving" (See the boxed insert for a description of the CAMELS rating system.
The CAMELS rating system assesses banks according to capital, assets, management, earnings, liquidity, and sensitivity to market risk.