Introduction to Problem Banks

New BASEL III Requirements

Total Risk ‐ Based Capital

Common Equity Tier 1 RBC

Leverage Ratio

Supplementary Leverage Ratio

%

Tier 1 RBC

≥ 10

≥ 8 ≥ 6 < 6 < 4

≥ 6.5 ≥ 4.5 < 4.5

≥ 5 ≥ 4 < 4 < 3

N/A

Well Capitalized

≥ 8 < 8 < 6

≥ 3 < 3

Adequately Capitalized

Undercapitalized

< 3

N/A

Significantly Undercapitalized Critically Undercapitalized

N/A

Tangible Equity (defined as Tier 1 Capital plus non ‐ Tier 1 perpetual Preferred stock) to Total Assets ≤ 2

Prompt Corrective Action (PCA) Capital Categories 1. Well capitalized 2. Adequately capitalized 3. Undercapitalized 4. Significantly undercapitalized 5. Critically undercapitalized