capital adequacy
The principle upheld by banking regulators that banks should have, and be seen to have, a certain amount of capital relative to the amount of business which the banks undertake and the commercial risk associated with that business. UK banks authorised by the Financial Services Authority are required to have specified ratios of capital in comparison to the amount of their assets. If the assets fall in value, the amount of capital required to be maintained by the ratio should ensure that a bank has sufficient capital to absorb such losses and still repay its creditors and depositors.
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Practical Law Dictionary. Glossary of UK, US and international legal terms. . 2010.

Look at other dictionaries:

  • capital adequacy — The measure of the sufficiency of a firm s funds to meet its business and regulatory obligations; see financial resources and financial resources requirement. Dresdner Kleinwort Wasserstein financial glossary * * * capital adequacy ˌcapital… …   Financial and business terms

  • capital adequacy — /ˌkæpɪt(ə)l ædɪkwəsi/, capital adequacy ratio /ˌkæpɪt(ə)l ædɪkwəsi ˌreɪʃiəυ/ noun the amount of money which a bank has to have in the form of shareholders’ capital, shown as a percentage of its assets. Also called capital to asset ratio (NOTE:… …   Dictionary of banking and finance

  • Capital Adequacy — (достаточность капитала) требование к регулируемому лицу (банку или строительному обществу building society) по поддержанию минимального уровня капитала с учетом рискованности активов. Путем секьюритизации активов и вывода активов за баланс без… …   Ипотека. Словарь терминов

  • capital adequacy — total investment necessary in order to establish a business …   English contemporary dictionary

  • Capital adequacy ratio — (CAR), also called Capital to Risk (Weighted) Assets Ratio (CRAR), is a ratio of a bank s capital to its risk. National regulators track a bank s CAR to ensure that it can absorb a reasonable amount of loss [Cite web |… …   Wikipedia

  • capital adequacy ratio — ➔ ratio * * * capital adequacy ratio UK US noun [C] (ABBREVIATION CAR, also capital ratio) ► BANKING, FINANCE the amount of a bank s capital in relation to the amount of money that it has lent to people and organizations: » …   Financial and business terms

  • Capital Adequacy Ratio - CAR — A measure of a bank s capital. It is expressed as a percentage of a bank s risk weighted credit exposures. Also known as Capital to Risk Weighted Assets Ratio (CRAR). This ratio is used to protect depositors and promote the stability and… …   Investment dictionary

  • Capital Adequacy Directive — The Capital Adequacy Directive is a European directive that aims to establish uniform capital requirements for both banking firms and non bank securities firms. The original 93/6/EEC ( CAD1 ) directive was amended by 98/31/EEC ( CAD2 ), to… …   Wikipedia

  • capital adequacy ratio — (Economics) ratio between the capital of a financial institution and its investments (as the ratio between the capital and total assets is higher, the capital provides a greater level of security) …   English contemporary dictionary

  • capital adequacy ratio — The proportion of a bank s total assets that is held in the form of shareholders equity and certain other defined classes of capital. It is a measure of the bank s ability to meet the needs of its depositors and other creditors. The minimum… …   Accounting dictionary

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