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Credit FAQ: Standard & Poor's Risk-Adjusted Capital Framework For Financial Institutions Apr 09
Standard & Poors, April 2009
Abstract
Standard & Poor's Ratings Services is introducing amended criteria for assessing the capital adequacy of financial institutions that we rate worldwide, for use in determining their creditworthiness. Specifically, these criteria feature a new risk-adjusted capital (RAC) ratio for financial institutions. To calculate that, we compare our newly developed measure, Standard & Poor's risk-weighted assets, to a new measure of capital, total adjusted capital (TAC). With the RAC, a risk-adjusted capital ratio, we aim to provide a complementary, globally consistent, and independent view of capital adequacy for each of the financial institutions that we rate. The RAC initiative is aimed at augmenting our independence, strengthening the rating process, and increasing our transparency to better serve the global markets. Unlike regulatory ratios...
Standard and Poors RatingsXpress Credit Research provides in-depth coverage of international corporates, financial institutions, insurance companies, utilities, sovereigns and structured finance programs. RatingsXpress Credit Research lets users determine the credit rating of holdings and identify key factors underlying an issuer's creditworthiness, distinguishes the different risk exposures for new and existing deals, and provides an understanding of how their analysts interpret key regulatory, political and environmental events and their economic impact.
Research Type: Commentary
Criteria articles describe the thought process and methodology Standard & Poor's analysts use in determining ratings. These commentary pieces discuss both the quantitative (economic and financial) and qualitative (business analysis and caliber of management) aspects of the analysis, as well as legal issues.
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