January 19, 2012 at 14:27 PM EST
Fitch Updates Core Capital Measure For Assessing Banks
Fitch Ratings has updated how it derives its Fitch Core Capital measure used to assess a bank’s capitalization. In calculating FCC the agency’s objective is to arrive at a figure, comparable across countries, measuring a bank’s highest-quality, “going-concern” capital. FCC is broadly similar both to Basel III’s Common Equity Tier 1 measure [...]

Fitch Ratings has updated how it derives its Fitch Core Capital measure used to assess a bank’s capitalization.

In calculating FCC the agency’s objective is to arrive at a figure, comparable across countries, measuring a bank’s highest-quality, “going-concern” capital. FCC is broadly similar both to Basel III’s Common Equity Tier 1 measure and Common Capital Tier 1 used in the US but it is not dictated by regulatory capital considerations and may differ from these.

FCC comprises loss-absorbing, “going-concern” capital instruments. FCC starts with equity reported in the bank’s financial statements and deducts items that Fitch does not consider to be readily available to absorb losses in a stress scenario. This may be because they are not fungible, failed to perform as loss-absorbing instruments in the past and are difficult to monetize or where inclusion introduces an element of double-counting.

FCC excludes all hybrid capital instruments. Nevertheless, good-quality hybrid capital is still captured in an ancillary capital ratio, the Fitch Eligible Capital (FEC) ratio. FEC adds a bank’s hybrid securities to FCC to the extent that they receive “equity credit”. FEC represents a secondary measure of bank capitalization for Fitch.

For the detailed description, see Fitch Core Capital: The Primary Measure of Bank Capitalisation

Technorati Tags: bank capital, big banks

Stock Market XML and JSON Data API provided by FinancialContent Services, Inc.
Nasdaq quotes delayed at least 15 minutes, all others at least 20 minutes.
Markets are closed on certain holidays. Stock Market Holiday List
By accessing this page, you agree to the following
Privacy Policy and Terms and Conditions.
Press Release Service provided by PRConnect.
Stock quotes supplied by Six Financial
Postage Rates Bots go here