Tier 1 capital
Description
Tier 1 capital is the core measure of a bank’s financial strength from a regulator’s point of view. It is composed of core capital, which consists primarily of common stock and disclosed reserves (or retained earnings),but may also include non-redeemable non-cumulative preferred stock. The Tier 1 capital ratio is the ratio of a bank’s core equity capital to its total risk-weighted assets
Related formulasVariables
T1 | Tier 1 capital (dimensionless) |
CEC | Bank's core equity capital (dimensionless) |
RWA | Total risk-weighted assets (dimensionless) |