Own funds

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Bank prudential management.

Broadly speaking, in bank funding and capital management, 'own funds' means the bank's own capital.

Own funds are a very stable source of funding, because there is either no contractual obligation to repay them, or only a limited obligation.

Other sources of the bank's funding are 'borrowed' funds.

The Capital Requirements Regulation defines a bank's own funds as the sum of its Tier 1 capital and Tier 2 capital.

In other contexts, the term 'own funds' is also used in a narrower sense, limited - for example - to the bank's equity capital (CET1).

See also