PECULIARITIES OF ASSESSING THE BANK'S EQUITY CAPITAL ADEQUACY
Abstract
The article examines the nature and specifics of assessing the adequacy of a bank's capital. It is noted that the adequacy of a bank's equity capital is a decisive factor in determining the scope and direction of the bank's active operations, as well as in ensuring the bank's solvency, liquidity and financial stability. Ambiguous approaches to the interpretation of the nature of the bank's capital adequacy are presented. The prerequisites for the need for banks to form sufficient equity capital in the current operating environment are formulated. Attention is focused on the need to assess the adequacy of banks' capital adequacy in the context of increasing its level. The expediency of increasing the volume of banks' capital and maintaining its adequacy to the risks of banks' activities as a possible way of solving the problem of capital adequacy is noted. The author stresses the need for domestic banks to comply with the recommendations of the Basel Committee on Banking Regulation and Supervision and their prompt and full implementation into Ukrainian banking legislation. The article assesses the adequacy of PRAVEX Bank's capital adequacy in accordance with the Basel recommendations. The dynamics of the components of the bank's regulatory capital (core capital and additional capital) are analysed. The main changes in the requirements for capital adequacy of banks in 2024 are presented and their practical implementation in the activities of JSC "PRAVEX Bank" is reflected. The need for a three-tier structure of bank capital is underpinned by the allocation of first and second tier capital and first tier core capital. Attention is focused on the level of the bank's total risk exposure, which includes the bank's risk-weighted assets, the minimum level of operational and market risk, and the bank's uncovered credit risk. It is emphasised that a qualitative assessment of the adequacy of banks' capital adequacy should be considered in terms of compliance with the requirements for the quality and structure of the bank's regulatory capital and improvement of approaches to calculating credit risk-weighted assets, taking into account all possible risks of the bank.
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