1. To reduce excessive variability of risk-weighted assets and to enhance the comparability of risk-weighted capital ratios, banks will be subject to a floor requirement that is applied to risk-weighted assets. The output floor will ensure that banks' capital requirements do not fall below a certain percentage of capital requirements derived under standardised approaches.
Output floor requirements
- Common Equity Tier 1 must be at least 4.5% of risk-weighted assets at all times.
- Tier 1 capital must be at least 6.0% of risk-weighted assets at all times.
- Total Capital (Tier 1 capital and Tier 2 capital) must be at least 8.0% of risk-weighted assets at all times .
3. In addition, a Common Equity Tier 1 capital conservation buffer is set at 2.5% of risk-weighted assets for all banks . Banks may also be subject to a c…