Equity (capital); capital resources

Capital generally held by an enterprise and meeting the criteria of – permanence, – loss absorbency, and – freedom to make distributions. – According to IAS (RK 49 c), the amount of a company’s assets remaining after deduction of all liabilities. – In the case of banks, according to the definition of the supervisory authorities, the possession of assets sufficient to meet their obligations to creditors; for Germany, see § 10 KWG. In detail, usually the total of – core capital (balance sheet equity plus economic equity), – supplementary capital (prudential filter) and – Tier 3 capital. – In the case of a margin account, the profit or loss as the difference between the assets held on the one hand and outstanding loans to purchase the assets on the other (the amount the investor would keep after all positions have been closed and all margin loans paid off). – See meltdown risk, adjustment wheel, equity arranger, supplementary chapter, overall bank management, leverage (effect), hedge fund risks, IAS 39, capital, capital buffer, countercyclical, credit line, leverage, prudential filter, ranking theory, setback effect, backing, leverage ratio, waiver rule, forced convertible bond. – The individual items are listed and explained Cf. Monthly Report of the Deutsche Bundesbank of January 2002, p. 43, Monthly Report of the ECB of February 2004, p. 77 ff, Monthly Report of the ECB of January 2005, p. 54 f., Monthly Report of the Deutsche Bundesbank of September 2005, p. 29 (equity ratio of German banks; p. 30: return on equity broken down by bank group), Monthly Report of the Deutsche Bundesbank of June 2006, p. 59 (reservations about the calculation methods), Monthly Report of the Deutsche Bundesbank of December 2006, p. 69 ff. (implementation of the Basel II capital adequacy rules, p. 91: revision of the definition of capital), BaFin Annual Report 2006,
pp. 43 f. (efforts to achieve a uniform definition of regulatory capital), pp. 56 f. (IASB demarcation of equity and debt), ECB Monthly Report July 2008, pp. 35 ff. (development of the cost of equity 2002-2008), BaFin Annual Report 2008, pp. 50 (hybrid financial instruments and equity), BaFin Annual Report 2009, p. 38 (strengthening of capital adequacy requirements), Deutsche Bundesbank Annual Report 2009, p. 98 (on the Basel Committee’s capital adequacy guidelines), BaFin Annual Report 2010, p. 125 (the Capital Adequacy Directive, which came into force, determines the eligibility of hybrid capital components as regulatory capital at institutions), ECB Annual Report 2012, p. 133 (European Commission Capital Requirements Directive and Regulation [CRD IV/CRR]), Bafin Annual Report 2012, p. 119 f. (implementation issues), Deutsche Bundesbank Monthly Report of May 2013, p. 59 ff. (regulatory capital in the wake of Basel III).

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University Professor Dr. Gerhard Merk, Dipl.rer.pol., Dipl.rer.oec.
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