• BANK Division 3.2.A BANK Division 3.2.A Required capital and ratios

    • BANK 3.2.1 Introduction

      (1) A banking business firm is expected to meet minimum risk-based capital requirements for exposure to credit risk, market risk and operational risk. The firm's capital adequacy ratios (consisting of CET 1 ratio, total tier 1 ratio and total capital ratio) are calculated by dividing its regulatory capital by total risk-weighted assets.
      (2) Total risk-weighted assets of a banking business firm is the sum of:
      (a) the firm's risk-weighted on-balance-sheet and off-balance-sheet items calculated in accordance with Part 4.4; and
      (b) 12.5 times the sum of the firm's market and operational risk capital requirements (to the extent that each of those requirements applies to the firm).
      Note For how to calculate the firm’s market risk and operational risk capital requirements, see rule 6.1.1(3) and Part 7.4, respectively.
      (3) In this Part:

      consolidated subsidiary, of a banking business firm, means:
      (a) a subsidiary of the firm; or
      (b) a subsidiary of a subsidiary of the firm.
      Amended by QFCRA RM/2015-1 (as from 1st July 2015).
      Amended by QFCRA RM/2020-2 (as from 1st January 2021)

    • BANK 3.2.2 Required tier 1 capital on authorisation

      An entity must have, at the time it is authorised, tier 1 capital at least equal to the base capital requirement for the activity applied for. The Regulatory Authority will not grant an authorisation unless it is satisfied that the entity complies with this requirement.

      Derived from QFCRA RM/2014-2 (as from 1st January 2015).

    • BANK 3.2.3 Required ongoing capital

      (1) A banking business firm must have at all times capital at least equal to the higher of:
      (a) its base capital requirement; and
      (b) its risk-based capital requirement.

      Note A firm whose minimum capital requirement is its risk-based capital requirement is subject to the additional requirement to maintain a capital conservation buffer — see rule 3.3.2.
      (2) The amount of capital that a firm must have is its minimum capital requirement.
      Derived from QFCRA RM/2014-2 (as from 1st January 2015).

    • BANK 3.2.4 Base capital requirement

      The base capital requirement for a banking business firm is:

      (a) for a deposit-taker — QR 35 million; or
      (b) for an investment dealer — QR7 million.
      Amended by QFCRA RM/2015-3 (as from 1st January 2016).

    • BANK 3.2.5 Risk-based capital requirement

      The risk-based capital requirement for a banking business firm is the sum of:

      (a) its credit risk capital requirement;
      (b) its market risk capital requirement; and
      (c) its operational risk capital requirement.
      Derived from QFCRA RM/2014-2 (as from 1st January 2015).

    • BANK 3.2.6 Capital adequacy ratios

      (1) A banking business firm's capital adequacy is measured against 3 capital ratios expressed as percentages of its total risk-weighted assets.
      (2) A firm's minimum capital adequacy ratios are:
      (a) a CET 1 capital ratio of 4.5%;
      (b) a tier 1 capital ratio of 6%; and
      (c) a regulatory capital ratio of 8%.
      Note Under rule 3.3.2, at least 2.5% (by way of a capital conservation buffer) must be held by a banking business firm in addition to the minimum capital adequacy ratios. The firm's CET 1 capital plus capital conservation buffer must therefore be no less than 7% of its total risk-weighted assets.
      (3) The Regulatory Authority may, if it believes it is prudent to do so, increase any or all of a firm's minimum capital adequacy ratios. The authority will notify the firm in writing about a new capital adequacy ratio and the timeframe for meeting it.
      (4) A firm must maintain at all times capital adequacy ratios higher than the required minimum so that adequate capital is maintained in the context of the firm's risk tolerance, risk profile and capital requirements, and as an additional buffer to absorb losses and problems from market volatility. These higher ratios are the firm's risk-based capital adequacy ratios.
      Derived from QFCRA RM/2014-2 (as from 1st January 2015).