Our equity capital: very good
Bank Burgenland’s equity capital is something to be proud of. While other banks try hard to reduce their equity capital to the very minimum required by law, Bank Burgenland’s equity capital is significantly above the legal requirements.
The Basel Banking Regulations require a significant increase in the quality, consistency and transparency of the equity base; the equity capital ratio was raised to 10.5% with Basel III. With a total capital ratio of 20.4% as of 31/12/2019, Bank Burgenland clearly surpasses this limit and has one of the highest ratios in Austria and globally.
Why is a strong equity base important for a bank?
The equity base, or the ratio of equity capital to risk-weighted assets, is considered in the finance industry to be a key indicator of a bank’s resilience to crisis. The higher this indicator, the more equity capital is provided to the bank by its owner to cover any realised risks. A reduction of risks in the balance sheets, for instance by improving guarantees, also raises the equity ratio.
In summary, one can say that a high equity ratio not only improves a bank’s ability to bear risk but also its competitiveness and independence and is therefore an indicator of a healthy and solid bank.