What is the CET1 ratio?
When evaluating the capital stability of a bank, the so-called CET1 Ratio (the acronym of Common Equity Tier 1) is the most important indicator of its financial strength. The ratio, expressed as a percentage, is a measurement of a bank’s equity capital compared with its total risk-weighted assets.
But what does this mean in practice? The CET1 ratio provides a measurement of the resources with which the bank guarantees the loans it grants to its clients indicates and the risks represented by its non-performing loans.
CET1 ratio: the ECB requires a minimum threshold of 10.5% for Italian banks.
The ECB and EU authorities have decided that the ratio should be at least 8% in all countries, failing which the bank is placed under compulsory administration. Recently, this has been the case for a number of banks in Italy.
Each EU-member country has been assigned a minimum CET1 ratio for its banks. The general ratio assigned to Italian banks is 10.5%.
What ranking does BANCA FINNAT have in Italy?
Banca Finnat features a CET1 ratio of about 30%, which is incredibly high, considering that the average figure in Italy, at the end of June 2016, was 12.4%.
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