Tier 1 capital ratio calculator
The Tier 1 ratio adds Additional Tier 1 capital to CET1 and divides by risk-weighted assets. Basel III sets the minimum at 6%.
Tier 1 ratio formula
Tier 1 ratio = (CET1 capital + Additional Tier 1 capital) ÷ risk-weighted assets. Tier 1 capital is the going-concern capital that absorbs losses while the bank keeps operating.
Minimum requirement
Basel III requires Tier 1 capital of at least 6% of RWA, of which at least 4.5% must be CET1. That leaves up to 1.5% of RWA that can be met with Additional Tier 1 instruments such as perpetual contingent convertibles, if they meet the eligibility criteria.
Worked example
CET1 of 120 and AT1 of 20 against RWA of 1,000 gives a Tier 1 ratio of (120 + 20) ÷ 1,000 = 14.0%, which is 8 points above the 6% minimum.
Tier 1 ratio vs leverage ratio
Both use Tier 1 capital in the numerator. The Tier 1 ratio divides by risk-weighted assets; the leverage ratio divides by a non-risk-based exposure measure and has a 3% minimum. See the leverage ratio calculator.
Frequently asked questions
What is the Tier 1 capital ratio?
Tier 1 capital (CET1 plus Additional Tier 1) divided by risk-weighted assets. Basel III sets a minimum of 6%.
Is Tier 1 the same as CET1?
No. Tier 1 includes CET1 and Additional Tier 1 instruments. CET1 alone must be at least 4.5% of RWA.
How is Tier 1 different from Tier 2?
Tier 1 absorbs losses while the bank is a going concern. Tier 2 is gone-concern capital that absorbs losses in resolution or liquidation. Total capital (Tier 1 plus Tier 2) must be at least 8% of RWA.
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.