CET1
Business & Finance abbreviation · Banking
| Stands for | Common Equity Tier 1 |
|---|---|
| Categories | Business & Finance |
CET1 stands for Common Equity Tier 1, a banking abbreviation.
Highest-quality form of bank capital, consisting mainly of common shares and retained earnings minus deductions such as goodwill. Regulators measure bank strength by the CET1 ratio, CET1 capital divided by risk-weighted assets.
Example: The bank reported a CET1 ratio of 13.2 percent, well above its regulatory minimum of 10.5 percent.
Usage notes
Under Basel III, banks must hold CET1 of at least 4.5 percent of risk-weighted assets, plus a 2.5 percent capital conservation buffer and any extra buffers for systemic importance or stress-test results. Banks usually announce buybacks only when CET1 is comfortably above requirements. Additional Tier 1 and Tier 2 instruments rank below CET1.
Related abbreviations
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