I
iActuary
Member
In chapter 12 section 2.6 first paragraph, it says the capital ratio (tier 1 + tier 2 divided by risk weighted assets) increased from 9% to 11%. I think it's actual solvency level observed in banks.
Same chapter section 2.8 (1. Regulatory capital), the solvency ratio is defined as regulatory capital divided by risk weighted assets, with the requirements increasing from 2% to 7%.
Based on my reading (I'm not in the banking sector), the capital calculation is always 8% multipled by something / risk weighted assets. So my question in particular to the second paragraph above: how do we get the requirements of 2% (and also 7%)?
Can someone help please? Thanks!
Same chapter section 2.8 (1. Regulatory capital), the solvency ratio is defined as regulatory capital divided by risk weighted assets, with the requirements increasing from 2% to 7%.
Based on my reading (I'm not in the banking sector), the capital calculation is always 8% multipled by something / risk weighted assets. So my question in particular to the second paragraph above: how do we get the requirements of 2% (and also 7%)?
Can someone help please? Thanks!