CAPITAL ADEQUACY
capital adequacy: translation
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
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capital adequacy ˌcapital ˈadequacy noun [uncountable]
BANKING a measure of whether a bank has enough capital in relation to possible losses on loans to borrowers:
• S&P said the bank has excellent capital adequacy and a low-risk investment strategy.
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A requirement for banks to have a minimum amount of capital to support their operations.In 1988, central banks from the G10 countries agreed to move towards one standard of capital adequacy. The BIS (Bank for International Settlements) rules determine how much and what type of capital commercial banks can raise in the financial markets and what type of loans they are allowed to make.
► See also Basel Rules, BIS, G10, Tier One.
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capital adequacy UK US noun [U]
► BANKING,
FINANCE capital adequacy requirements/rules/standards »
For the banks that remain open, minimum capital adequacy requirements have been doubled.