Kärnprimärkapital

Kärnprimärkapital, often translated as Common Equity Tier 1 (CET1) capital, is a crucial metric in banking regulation. It represents the highest quality form of capital a bank can hold. This capital acts as a buffer against unexpected losses, ensuring the stability of the financial institution and the broader financial system.

CET1 capital primarily consists of common shares and retained earnings. It excludes items like preferred stock or certain types of hybrid capital that are considered less loss-absorbing. The concept was introduced and strengthened through international regulatory frameworks, most notably Basel III, following the global financial crisis.

Regulators set minimum CET1 capital ratios that banks must maintain relative to their risk-weighted assets. These ratios are designed to ensure that banks have sufficient capital to absorb losses without becoming insolvent. A higher CET1 ratio generally indicates a stronger and more resilient bank. Analyzing a bank's CET1 capital is a key way for investors and supervisors to assess its financial health and its ability to withstand economic downturns. It is a forward-looking measure of a bank's capacity to absorb losses.