Leading European banks ranked by tier 1 capital 2020

Tier 1 capital displays the financial strength of a bank as it shows the bank’s core capital including equity capital and disclosed reserves. Regulators use tier 1 capital for the purpose of ensuring that banks have enough capital in case of unexpected losses. As of 2020, HSBC had the highest amount of tier 1 capital of any bank in Europe with over 148 billion U.S dollars.

Tier 1 capital ratio

After the financial crisis it became clear that a lot of banks were running on too much debt and did not hold enough enough equity. Banks must have a tier 1 capital ratio of a minimum six percent, according to to Basel III rules. According to the European Banking Authorities (EBA) stress test, aggregated national results indicated that Europe’s banks had a higher than required amount of tier one capital even in an adverse scenario.

European banks appear safe for now

In 2018, all the European banks reviewed passed the EU-wide stress test. The EU-wide stress test is run in order to assess Europe’s banking sectors ability to withstand shocks to the market and to ensure a repeat of the financial crisis does not happen again. The test, which requires banks to have a ratio of over 5.5 percent for fully loaded CET1 capital saw Europe’s 48 largest banks score anywhere between 6.4 percent to 34 percent.