This chapter describes buffers that banks are expected to maintain above the minimum risk-based capital requirements, as well as the capital conservation requirements that apply to banks that do not maintain such buffers.

Version effective as of 01 Jan 2027

Updated to include the technical amendments published in November 2023.

Capital conservation buffer

30.1 This chapter outlines the operation of the capital conservation buffer, which is designed to ensure that banks build up capital buffers outside periods of stress which can be drawn down as losses are incurred. The requirement is based on simple capital conservation rules designed to avoid breaches of minimum capital requirements.

30.2 A capital conservation buffer of 2.5%, comprised of Common Equity Tier 1 (CET1), is established above the regulatory minimum capital requirement. [Common Equity Tier 1 must first be used to meet the minimum capital and total loss-absorbing capacity (TLAC) requirements if necessary (including the 6% Tier 1, 8% Total capital requirements), before the remainder can contribute to the capital conservation buffer.] Capital distribution constraints will be imposed on a bank when capital levels fall within this range. Banks will be able to conduct business as normal when their capital levels fall into the conservation range as they experience losses. The constraints imposed only relate to distributions, not the operation of the bank.