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 ?
Those banks, whose assessment of stability in 2019 was conducted using three stages, and the results of which the National Bank identified the required level of capital adequacy ratios, would have to comply with appropriate capitalization / restructuring programs and ensure compliance with the required level of capital adequacy ratios by September 30, 2020 .
Capital adequacy ratios (CAR) of commercial banks in Vietnam have improved because of their increased equity, the central bank of the nation said.
Security Bank's judicious use of capital resulted in sustained strong capital adequacy ratios. Common Equity Tier 1 Ratio was at 16.19 percent and Total Capital Adequacy Ratio was at 18.46 percent in the second quarter of 2018 versus 16.63 percent and 18.95 percent, respectively, a year ago.
Banks are following Basel III principles for calculating the Capital Adequacy Ratios effective December 2017 in line with the Guidelines issued by the Central Bank.
"We could affirm the ratings if we see that the bank receives sufficient capital support, restoring capital adequacy ratios to substantially above the minimum required levels, and if the risks of noncompliance with regulatory requirements subside, while the bank's liquidity position remains stable," said the report.
Silkbank stands fully compliant on SBP's Minimum Capital Requirement (MCR) as well as the Capital Adequacy Ratios (CAR).
"As a result, the Group's capital adequacy ratios will be negatively affected.
The authorities will also examine the financial soundness and capital adequacy ratios of 85 savings banks, and announce appropriate measures based on the assessments by the end of September.
Speaking at the same conference, Central Bank Governor Muhammad al-Jasser said Saudi banks were in a good position to extend loans to the private sector thanks to robust capital adequacy ratios.
IFSB-2 proposes two methods to calculate capital adequacy ratios of IIFS.
UAE banks have sought to strengthen their capital adequacy ratios following new rules issued by the country's Central Bank.
The capital adequacy ratios of financial institutions are calculated on the basis of their assets weighted according to credit risks assigned under international standards.
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