أنشئ حسابًا أو سجّل الدخول للانضمام إلى مجتمعك المهني.
Basel 1 defines capital based on two tiers:
1. Tier ( core capital) and Tier 2 ( Supplementary capital).
2 According to basel 1, the total capital should represent at least eight percent of the bank's credit risk.
3 in addition, the basel agreement identifies three types of credit risks:
a. the on balance sheet risk
b The trading off balance sheet risk
c The non trading off balance sheet risk
Capital adequacy ratio according to Basel Committee as follows:
Capital (core capital + head cushions and a supplementary money) ≥ 8%
(A) core capital: and consists of shareholders 'equity + declared precautions and general precautions and legal + undistributed profits or retained, and when the capital adequacy calculation excludes goodwill + investments in banks and the financial institutions + mutual investments in the banks' capital
(B) capital cushions or complementary: where precautions include undeclared + revaluation reserves + reserves the face of bad loans + medium-term lending from the shareholders' + securities (stocks and bonds that convert into equity after the period
It should also be noted that impose restrictions on top of cushions money: - That does not exceed the capital cushions 100% of core capital elements. - Subjected to re-evaluation to deduct 55% of the value of reserves. - Have a maximum allocation of constituent to face any risk of non-specific 1.25% of assets and contingent liabilities dangerous weighted. - Have a maximum lending support to 50% of core capital in order not to rely onthese loans concentration
thanks for the invitation He apologized for errors in translation
agree with all
thank you for the invitation
agree with expert answers above
The capital adequacy framework sets out the approach for the computation of minimum capital required by a banking institution to operate as a going concern entity.
Capital adequacy is determined by using the Capital Adequacy Ratio.
Capital Adequacy Ratio is a measure of the amount of a Bank's Capital expressed as a percentage of its Risk-Weighted Assets and according to Basel1 it must be equal to or greater than8%.
I agree with the answer given by frank mwansa ACCOUNTING LECTURER and other team members.
