Capital Adequacy Ratio


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Capital Adequacy Ratio

A measure of a bank's ability to meet its obligations relative to its exposure to risk. The capital adequacy ratio exists to ensure that a bank is able to handle losses and fulfill its obligations to account holders without ceasing operations. It is calculated as:

CAR = ( Tier 1 Capital + Tier 2 Capital ) / Risk-weighted assets.
References in periodicals archive ?
Ecobank CEO, Albert Essien said after the first QNB acquisition that he expects the bank s capital adequacy ratio to hit 18.
Emirates NBD's total capital adequacy ratio and Tier 1 capital ratio were 19.
The new rules stipulate the capital adequacy ratio of any domestic banks to be over 12.
UAE banks have sought to strengthen their capital adequacy ratios following new rules issued by the country's Central Bank.
Various degrees of risk weighting were set in 1988 by the Basel-based Bank for International Settlements (BIS) to help banks compute their capital adequacy ratios and limit excessive exposure to risky assets.
The capital adequacy ratio for the operating insurance companies is expected to be about 110%-120% at year-end 2000 excluding reinsurance.
ICICI Bank UK's capital position continued to be strong with a capital adequacy ratio of 18.
The central bank ''would like to devise measures to make its capital adequacy ratio rebound, such as the setting aside of a greater amount of legal reserves,'' a core part of a bank's capital, a BOJ Policy Board member said.
Mori said the agency will closely monitor stock prices at the end of March to study how much anticipated increases in appraisal losses on banks' stockholdings could lower their capital adequacy ratios.
As a result, it may raise the tier 1 capital adequacy ratio to over 8% from the current below 7%.
MTFG grabbed the top slot in terms of the capital adequacy ratio with its ratio rising to the upper half of the 12% level.
The acquisition of Max Matthiessen will slightly decrease the capital adequacy ratio in the coming years.
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