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Capital Adequacy Loan Agreement

September 13th, 2021

The Tier 1 leverage ratio is the ratio of a bank`s core capital to its balance sheet total. It is calculated by derising Tier 1 capital by a bank`s average consolidated balance sheet total and certain off-balance-sheet liabilities. The higher the Tier 1 leverage ratio, the more likely it is that a bank will be able to withstand negative shocks on its balance sheet. During the liquidation process, depositor-owned funds are given higher priority than the bank`s capital, so depositors can only lose their savings if a bank records a loss in excess of the amount of capital it holds. The higher the bank`s capital ratio, the higher the level of protection of the depositor`s assets. The capital ratio is calculated by dividing a bank`s capital by its weighted assets. . . .

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