Tier 1 capital ratio of the banking sector in Luxembourg 2014-2020

The financial strength of Luxembourg's banking sector decreased overall since 2017, even though the Tier 1 capital ratio still comfortable exceeded the minimum requirements. The Tier 1 capital ratio measures a bank's core equity capital divided by its total risk-weighted assets (RWA). Developed in its current form in the third Basel Accord, known as Basel III, financial institutions must maintain a ratio above a certain minimum to ensure that they are protected against unexpected losses, such as those that occurred during the financial crisis. The minimum was set at six percent.