Tier 1 Leverage Ratio Calculator

Written by:
PK

On this page is a bank tier 1 leverage ratio calculator. Enter the bank's reported Tier 1 Capital and Total Assets to compute the Tier 1 Leverage Ratio.

Tier 1 Leverage Ratio Calculator

What is the Tier 1 Leverage ratio?

A bank's Tier 1 leverage ratio is the percentage of its total assets which are classified as Tier 1 capital (highest quality and liquid). Tier 1 capital is defined by Basel III, and refers to high quality liquid assets which can be readily converted to cash if necessary – but not necessarily the highest quality assets, termed Common Equity Tier 1 Capital.

Basel III required a tier 1 leverage ratio greater than 3% [PDF] at phase-in, but always check the latest requirements.

Basel III asset quality tiers
Asset quality tiers (Basel III)

Tier 1 Leverage Ratio Formula

The tier 1 leverage ratio formula is:

Tier\ 1\ Leverage\ Ratio=\frac{Tier\ 1\ Capital}{Total\ Assets}

Where:

  • Tier 1 Capital – Very high quality liquid assets, as defined by Basel III.
  • Total Assets – All assets owned by a bank.

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PK

PK started DQYDJ in 2009 to research and discuss finance and investing and help answer financial questions. He's expanded DQYDJ to build visualizations, calculators, and interactive tools.

PK is in his mid-30s and works and lives in the Bay Area with his wife, two kids, and dog.

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