Common Equity Tier 1 (CET1)

Common Equity Tier 1 (CET1) is a key measure of a bank's financial strength, representing its core capital, mainly common shareholders’ equity. It acts as a cushion to absorb losses and protect depositors and the economy during tough times. Regulators require banks to maintain a minimum CET1 ratio (a percentage of their risk-weighted assets) to ensure stability. Essentially, CET1 demonstrates a bank’s ability to withstand financial stress, ensuring it remains solvent and capable of supporting economic activity.