Net capital = core capital+tier 2 capital-deduction.
Core capital is the most stable and high-quality part of the capital of commercial banks, which can be permanently occupied by banks and can be used for long-term absorption of losses arising from bank operation and management. It is the core of bank capital, so it gets the name of "core" capital. Its composition is as follows: paid-in capital, capital reserve, surplus reserve, undistributed profit and minority shareholders' rights and interests.
Tier 2 capital includes revaluation reserve, general reserve, preferred stock, long-term subordinated bonds and convertible bonds. At the same time, the total amount of tier-two capital shall not exceed 100% of the total amount of tier-one capital, that is, core capital shall account for at least 50% of the total amount of capital;
Deduction items include: goodwill, capital investment of non-consolidated bank institutions, capital investment of non-consolidated non-bank financial institutions, non-self-use real estate investment, capital investment of industrial and commercial enterprises, and loan loss provision.
For example, it is known that a commercial bank has paid-in capital of 2000, capital reserve of 600, surplus reserve of 400, undistributed profit of 200, loan loss general reserve of 600, investment risk reserve of 300, non-self-use real estate of 500, long-term financial bonds of 600, investment of non-financial institutions of 200 and weighted risk assets of 70,000. Calculate net capital.
Net capital of commercial banks = 2000+600+400+200+600+300+600-500-200 = 4000.
Extended data:
Core capital composition information
1, paid-in capital:
Refers to the capital actually invested by investors in commercial banks according to the articles of association, contracts and agreements. The proportion of paid-in capital is the main basis for enterprises to distribute profits or dividends to investors. When the paid-in capital of an enterprise increases or decreases by more than 20% compared with the original registered capital, it shall apply to the original registration authority for change registration with the certificate of capital use or capital verification.
2. Capital reserve:
According to the accounting standards, there are four lenders that can be included in the capital reserve: capital (share capital) premium, other capital reserve, asset appraisal appreciation and capital conversion difference.
3. Surplus reserve:
Surplus reserve includes statutory surplus reserve, arbitrary surplus reserve and statutory public welfare fund. The surplus reserves extracted by enterprises can be used to make up losses, expand production and operation, increase capital (or share capital) or send new shares.
4. Undistributed profit:
Refers to the profits left in the enterprise over the years after the net profit of the enterprise makes up for the losses, withdraws the surplus reserve and distributes the profits to investors.
5. Minority equity:
Refers to the minority equity of a non-wholly-owned subsidiary that is included in the core capital at the time of consolidated statements, that is, the part of the net operating results and net assets of the subsidiary that is not directly or indirectly attributed to the parent company.
References:
Baidu Encyclopedia-Net Capital
References:
Baidu Encyclopedia-Core Capital