Under the international standard, the numerator is one of three capital measures: common equity Tier 1 capital, Tier 1 capital, or total capital. The denominator is the same RWA for all three1. A domestic-standard bank, which has no overseas business offices, uses core capital as the numerator and must keep the ratio at 4% or higher2.

Notes

  1. Financial Services Agency, "銀行法第十四条の二の規定に基づき、銀行がその保有する資産等に照らし自己資本の充実の状況が適当であるかどうかを判断するための基準" (Standards for determining whether a bank's capital adequacy is appropriate in light of the assets it holds, under Article 14-2 of the Banking Act, our translation; FSA Notice No. 19 of 2006), Article 2 (pages 26–27 of the full text) (in Japanese). ↩

  2. The same notice, Article 25 (pages 94–95 of the full text) (in Japanese). ↩