| gen. |
capital adequacy ratio (The proportion of a bank's total assets that is held in the form of shareholders' equity and certain other defined classes of capital. It is a measure of the bank's ability to meet the needs of its depositors and other creditors. The minimum international requirement is 8% but some countries may require banks to have a higher ratio. OB&M. Capital Adequacy Ratio (CAR), also known as Capital to Risk (Weighted) Assets Ratio (CRAR),[1] is the ratio of a bank's capital to its risk. National regulators track a bank's CAR to ensure that it can absorb a reasonable amount of loss and complies with statutory Capital requirements. It is a measure of a bank's capital. It is expressed as a percentage of a bank's risk weighted credit exposures. This ratio is used to protect depositors and promote the stability and efficiency of financial systems around the world. Two types of capital are measured: tier one capital, which can absorb losses without a bank being required to cease trading, and tier two capital, which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors. WK Alexander Demidov) |
