All national banks must comprise and maintain a risk-based minimum capital ratio commonly known as the risk-based capital ratio.
The national banks must maintain Tier 1 capital in an amount which is equal to at least 3% of adjusted total assets. This is also known as total assets leverage ratio.
With effect from 31st. December1990, any bank which has capital ratio less than the minimum, shall, within 60 days, submit to the Office of the Comptroller of the Currency (OCC) a plan which will describe the functionality by which the bank shall accomplish the applicable minimum capital ratios. Any bank in observance with a satisfactory plan to achieve the applicable minimum capital ratios will not be considered to be in violation of the prescribed laws and regulations.
However, the OCC may demand higher minimum capital ratios for a particular bank in any of the following circumstances, amongst others:-
• In case of a newly chartered bank
• In case of a bank which requires special supervisory attention
• In case of a bank that has incurred losses which has led to capital inadequacy
• Any bank with considerable exposure to declination in the fiscal value of its capital due to change in the rates of interest
• Any bank with significant exposure due to fiduciary or operational risk;
• Any bank exposed to a soaring degree of asset depreciation or exposed to a high volume or, problem loans;
