Basel 2 and Basel 3

A. Tier 1 Capital

A1. Basel 2:
Tier 1 capital ratio=4%
Core Tier 1 capital ratio=2%
The difference between the total capital requirement of 8.0% and the Tier 1 requirement can be met with Tier 2 capital.

A2. Basel 3:
Tier 1 capital ratio=6%
Core Tier 1 capital ratio (common equity after deduction)=4.5%
Core Tier 1 capital ratio ( common equity after deduction) before 2013=2%
Ist January 2013=3.5%
Ist January 2014=4%
Ist January 2015=4.5%

The difference between the total capital requirement of 8.0% and the Tier 1 requirement can be met with Tier 2 capital.

B. Capital Conservation Buffer
B1. Basel 2:
There is no capital conservation buffer.
B2. Basel 3: Banks will required to hold a capital conservation of 2.5% to withstand future periods of stress bringing the total common equity requirement to 7%.

Capital conservation buffer of 2.5%, on top of Tier 1 capital, will be met with common equity, after the application of deductions.

Capital conservation buffer before 2016=0%
Ist January 2016=0.625%
Ist January 2017=1.25%
Ist January 2018=1.875%
Ist January 2019=2.5%

The purpose of the conservation buffer is to ensure that banks maintain a buffer of capital that can be used to absorb losses during periods of financial and economic stress. While banks are allowed to draw on the buffer during such periods of stress, the closer their regulatory capital ratios approach the minimum requirement, the greater the constraints on earnings distributions.

C. Countercyclical Capital Buffer
C1. Basel 2:
There is no countercyclical capital buffer
C2. Basel 3:
 A countercyclical buffer within a range of 0%-2.5% of common equity or other fully loss absorbing capital will be implemented according to national circumstances.
Banks that have a capital ratio that is less than 2.5%, will face restrictions on payouts of dividends, share buybacks and bonuses.
The buffer will be phased in from January 2016 and will be fully effective in January 2019.
Countercyclical capital buffer before 2016=0%,
1st January 2016=0.625%
1st January 2017=1.25%
1st January 2018= 1.875%
1st January 2019=2.5%

D. Capital for Systemically Important Banks only

D1. Basel 2:
There is no capital for systemically important banks
D2. Basel 3:
Systemically important banks should have loss absobing capacity beyond the standards announced today and work continues on this issue in the Financial Stability Board and relevant Basel committee work streams.
The Basel Committee and the FSB are developing a well integrated approach to systemically important financial institutions which could include combinations of capital surcharges, contigent capital and bail-in debt.

Total Regulatory Capital Ratio=A+B+C+D