Capital adequacy requirements of a credit institution and its impact on the potential of Russian banks

Golovanov Vladislav Sergeevich

the Requirement for banks to have a minimum amount of equity capital is established at the legislative level and is due to the fact that banks assume various risks in the course of their activities and may incur losses if such risks materialize. At the same time, banks ' coverage of risks from their own capital is subject to the General rule: the greater the risks, the more capital is required to cover them. This suggests that banks ' compliance with the minimum equity requirements is not sufficient to ensure their effective functioning in the financial market. In order for a Bank to function effectively in the financial market, it is necessary that the amount of the Bank's equity capital is not just minimal, but sufficient to cover possible losses, which is why it is so important that banks constantly assess the risks they are exposed to and the losses they may incur in order to assess their potential. In the article, the author examines the requirements for the equity capital adequacy of a credit institution established by the international standards Basel I, Basel II and Basel III, and assesses their impact on the potential of Russian banks.

Keywords:equity, Bank, loss coverage, minimum capital, risks, tier 1 capital, tier 2 capital, potential of banks