Bank Analysis School eBook

Internal Use Only

The Capital Conservation Buffer Strengthened Capital Requirements

Capital Conservation Buffer (% of Risk Weighted Assets)

Maximum Payout

≥ 2.500 > 1.875 > 1.250 > 0.625

100%

60% 40% 20%

≤ 0.625 Minimum capital + full conservation buffer is 50 basis points higher than well capitalized thresholds.

0%

Maximum payout ratio applies to distributions (e.g. dividends) and discretionary bonus payments to executive officers

Internal Use Only

What Moves Capital Ratios?

Net Income

Dividends

Asset growth

Capital Ratios ↑ or ↓