CET1 ratio calculator
The CET1 ratio divides Common Equity Tier 1 capital by risk-weighted assets. Basel III sets the minimum at 4.5%, with a further 2.5% conservation buffer in CET1.
What is the CET1 ratio?
Common Equity Tier 1 is the highest-quality regulatory capital: broadly common shares and retained earnings, after regulatory deductions. The CET1 ratio is CET1 capital ÷ total risk-weighted assets. It shows how much loss-absorbing equity a bank has against the riskiness of its assets, not just their size.
Minimum and buffers
| Layer | Requirement (share of RWA) |
|---|---|
| Minimum CET1 | 4.5% |
| Capital conservation buffer | 2.5% (CET1) |
| Countercyclical buffer | 0 to 2.5% (CET1), set nationally |
| G-SIB surcharge | Depends on the bank's bucket |
The conservation buffer and the countercyclical buffer must be met with CET1. Banks that fall inside the buffer face restrictions on distributions such as dividends, which is why many banks aim well above the 7% (4.5% + 2.5%) level.
Worked example
A bank has CET1 capital of 120 and RWA of 1,000. Its CET1 ratio is 120 ÷ 1,000 = 12.0%, which is 7.5 percentage points above the 4.5% minimum and 5.0 points above the minimum plus the 2.5% conservation buffer. Use "Fill example" in the calculator above to see it.
Frequently asked questions
What is the minimum CET1 ratio under Basel III?
4.5% of risk-weighted assets, to be met at all times, plus a 2.5% CET1 capital conservation buffer.
What counts as CET1 capital?
Mainly common equity and retained earnings after regulatory adjustments. Additional Tier 1 and Tier 2 instruments are not CET1.
Why do banks hold more than 7% CET1?
Buffers can be larger (countercyclical buffer, systemic surcharges, supervisory add-ons), and management usually keeps a margin above the requirement to avoid restrictions on dividends and bonuses.
Sources: Basel Committee on Banking Supervision, Basel Framework (RBC20 calculation of minimum risk-based capital requirements; LEV20 leverage ratio) and Basel III international regulatory framework for banks, bis.org; BIS FSI summary of the capital conservation and countercyclical buffers. Checked 10 October 2026.