Minimum And Actual Capital

In fact, many banks have the capital to RWA ratio in excess of provisions.
Reasons for 'excess' capital

- Capital ratio is the ratio of bank capital in which at least should not be below it. Therefore, bank management chose to keep the ratio of capital to RWA was above the minimum conditions set by the supervisor.
- In some countries like America and England, bank supervisors to set capital ratio of RWA to a specific bank. In practice this ratio over the provisions of Basel.
- Many big banks have a world of their own internal risk models, which connect the level of capital requirements for the level of risk undertaken by banks in the business portfolio. Banks then adjust their capital. Model 'Economic capital' will result in greater capital requirements than Basel II. Banks that use this model are required to disclose it in accordance with Basel II, Pillar 2.
- Basel II and economic capital of a bank's model linking a bank's capital with the level and structure of the business. Banks are commercial enterprises and management plans for both organic growth and through acquisitions, require large capital to support the bank's growth plans.
- Access to capital markets can not always be ascertained, especially in terms of cost, because it is common for banks that plan to grow to ensure that: 1) they will not be hindered by a lack of capital; 2) the benefits of their plans will not be influenced by the high cost of capital as a result of factors such as short-term market to compete with government bonds.