The total capital ratio is a bank's total regulatory capital divided by its risk-weighted assets, expressed as a percentage. Total capital is the sum of Tier 1 capital, which is Common Equity Tier 1 (CET1) plus Additional Tier 1, and Tier 2 capital. It is the broadest of the three risk-based capital ratios and is often called the capital adequacy ratio.
Under Basel III the minimum total capital ratio is 8%, alongside minimums of 4.5% for CET1 and 6% for Tier 1. Adding the capital conservation buffer of 2.5% brings the level a bank must hold to avoid limits on dividends and bonuses to 10.5%, before any further buffers or supervisor-specific add-ons. A bank with total capital of 12 billion and risk-weighted assets of 80 billion has a ratio of 15%. Because the measure includes debt-like instruments, supervisors and investors pay closer attention to the CET1 ratio.