Nama Capital/Core Equity Ratios

alan4cult · 2009-10-29 15:37:02

Hi, I've been reading some articles about NAMA and they mention the core equity ratio and the capital ratio. What do these two ratios mean? And what should there levels be i.e. should they both be high or one high and the other low. Some articles say the capital ratio should be 10% or higher and the core equity no more…

29-10-2009 04:37PM

#1

alan4cult

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Hi,

I've been reading some articles about NAMA and they mention the core equity ratio and the capital ratio. What do these two ratios mean?

And what should there levels be i.e. should they both be high or one high and the other low. Some articles say the capital ratio should be 10% or higher and the core equity no more that 4%. Should they not both be high?

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#2 29-10-2009 04:46PM

Économiste Monétaire

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Basically, your capital ratio is the amount of equity and reserves (tier 1 capital) you have as a % of the total assets. The core equity ratio is just the tier 1 capital ratio minus reserves. How high they should be "depends," some regulators have different stated minimum levels—there are also differences in how you calculate risk-weighted assets.

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