Common equity and Credit card: Difference between pages

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''Banking - capital adequacy.''
A card indicating that the holder has been granted a line of credit.  


A bank's common equity is its ordinary share capital and certain accounting reserves including retained profits.
It enables the holder to make purchases and/or withdraw cash up to a pre-arranged ceiling; the credit granted can be settled in full by the end of a specified period or can be settled in part, with the balance taken as extended credit.  


For bank capital adequacy purposes, certain items are excluded from the calculation of common equity.
Interest is charged on the amount of any extended credit and the holder is sometimes charged an annual fee.


The excluded items include amounts which would be difficult for the bank to realise under stressed conditions, for example intangible assets and most deferred tax assets.
== See also ==
 
* [[Credit]]
 
Basel III raises the minimum level, after all deductions, to 4.5% of risk weighted assets.
 
Together with the Capital Conservation Buffer of 2.5%, the minimum total common equity standard becomes 7%.


== See also ==
* [[Basel III]]
* [[Capital adequacy]]
* [[Capital Conservation Buffer]]
* [[CET1]]
* [[Deferred tax]]
* [[Equity]]
* [[Intangible assets]]
* [[Ordinary shares]]
* [[Preference shares]]
* [[Preferred stock]]
* [[Reserves]]
* [[Share]]
* [[Tier 1]]

Revision as of 14:19, 23 October 2012

A card indicating that the holder has been granted a line of credit.

It enables the holder to make purchases and/or withdraw cash up to a pre-arranged ceiling; the credit granted can be settled in full by the end of a specified period or can be settled in part, with the balance taken as extended credit.

Interest is charged on the amount of any extended credit and the holder is sometimes charged an annual fee.

See also


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