Capital Adequacy Ratio Calculator
Enter Tier 1 capital, Tier 2 capital and risk-weighted assets and read the total capital ratio, the Tier 1 ratio, the Tier 2 ratio and the share of capital that is Tier 2, all at once. The substitution is printed under the answer, so the arithmetic can be checked against your own working rather than taken on trust. The pages that rank for this query hand you a spreadsheet template; this one does the division in the browser and shows it. It renders no minimum, no buffer and no verdict, because those are set by jurisdiction and revised, and risk-weighted assets are a figure you enter rather than one this page derives.
Capital adequacy ratio(1,050 + 375) ÷ 10,000 · Tier 1 ratio 10.50%
Every figure goes in the same units, and it does not matter which: thousands, millions or whole currency, as long as all three match. Commas and spaces are read as grouping, so 1,05,000 and 105 000 both arrive as the same number.
The formula, not a judgement. No minimum ships with this page and no pass or fail is rendered. Regulators set the minimum and its buffers by jurisdiction and revise them, and a labelled figure still reads as current to whoever is holding their own number beside it. Risk weights are yours to apply, so risk-weighted assets are a box you fill in rather than something this page works out for you. Exact division on the figures you enter: it computes the Basel formula and nothing else. It cannot know your jurisdiction's current minimum, how your assets were risk-weighted, or whether these are the figures a regulator would accept.
Common questions
- What is the capital adequacy ratio?
- It is a bank's capital measured against its risk-weighted assets: (Tier 1 capital + Tier 2 capital) divided by risk-weighted assets, expressed as a percentage. It is also written CAR, and in Basel documents as the total capital ratio. On 1,050 of Tier 1, 375 of Tier 2 and 10,000 of risk-weighted assets, total capital is 1,425 and the ratio is 14.25%. The same three figures give a Tier 1 ratio of 10.50% and a Tier 2 ratio of 3.75%, which is why the page shows all of them together.
- What is the difference between Tier 1 and Tier 2 capital?
- Tier 1 is the capital that absorbs losses while the bank keeps trading: paid-up ordinary shares, retained earnings and disclosed reserves, plus the additional Tier 1 instruments a supervisor accepts. Tier 2 is the capital that absorbs losses once it has not: subordinated debt of a qualifying maturity, certain revaluation reserves and eligible loan-loss provisions. The two are added for the total capital ratio and divided separately for the Tier 1 ratio, so the page reports both and also shows what proportion of your capital is Tier 2.
- What are risk-weighted assets, and why does this page not calculate them?
- Risk-weighted assets are a bank's exposures scaled by the weight assigned to each one, so cash and a commercial loan of the same size do not count the same. The weights depend on the jurisdiction, on whether the standardised or an internal-ratings approach is in use, and on the supervisor's own permissions, and they are revised. Shipping a table of them would give a number that is wrong for most people reading it and would go stale where nobody could see it. So risk-weighted assets are a box you fill in, and the three ratios on this page all divide by the figure you entered.
- Why is there no minimum or pass mark on this page?
- Because a printed minimum reads as current to whoever is holding their own number beside it, and minimums are not one figure. They are set by jurisdiction, they carry buffers that are switched on and off, and they change. A calculator that colours your ratio green or red is asserting something it cannot know about your regulator, your date and your institution. This page computes the stated formula, shows the substitution, and leaves the comparison with your own supervisor's current requirement to you.
- How do I enter the figures, and does the unit matter?
- Use whatever unit your statements use, as long as all three fields match: thousands, millions or whole currency all give the same percentages, because every result here is a ratio. Thousands separators are read rather than refused, so 10,000 and 10 000 both arrive as ten thousand and 1,05,000 is read as one hundred and five thousand. A currency sign in front of a figure is ignored. If a field is empty or cannot be read as one number, the page says which field it is rather than showing a blank.
- What does the Tier 2 share tell me?
- It is Tier 2 capital as a percentage of total capital, so 375 of Tier 2 in 1,425 of total capital is a share of 26.32%. It answers a different question from the Tier 2 ratio, which measures the same Tier 2 against risk-weighted assets instead. The share describes the composition of your capital and nothing more: the page does not compare it with any limit, because the treatment of the two tiers is a matter for your own jurisdiction's rules.
- Is anything I type sent anywhere?
- No. The division runs in your browser and nothing is uploaded, so a capital figure never leaves the device. The last three numbers you typed are kept in this browser's own local storage so the page opens where you left it, and clearing your site data removes them. There is no account and no upload step anywhere in the tool.
Exact division on the figures you enter: it computes the Basel formula and nothing else. It cannot know your jurisdiction's current minimum, how your assets were risk-weighted, or whether these are the figures a regulator would accept.