Basel III International Banking Framework RBC30: Hold the capital conservation and countercyclical buffers in CET1 and observe distribution constraints

Above the minimum, banks hold a capital conservation buffer of 2.5% of RWA in CET1, available only after CET1 has been used to meet the 6% Tier 1, 8% total capital and TLAC minimums (RBC30.1 to 30.2). When capital falls into the buffer range, distributions (dividends, share buybacks and discretionary bonuses) are constrained by minimum conservation ratios recalculated at each distribution date: with no countercyclical buffer, a CET1 ratio of 4.5% to 5.125% requires 100% of earnings to be retained, above 5.125% to 5.75% 80%, above 5.75% to 6.375% 60%, above 6.375% to 7.0% 40%, and above 7.0% none; a bank wishing to pay more can raise private capital for the excess, discussed with the supervisor in capital planning (RBC30.3 to 30.5). The countercyclical buffer, set by each jurisdiction's designated authority between 0% and 2.5% of RWA when excess credit growth builds system-wide risk, is pre-announced up to 12 months before an increase and released immediately on a decrease (RBC30.6 to 30.11). An internationally active bank calculates its own requirement as the average of the rates in the jurisdictions of its private sector credit exposures, weighted by the credit risk charge in each and located on an ultimate risk basis (RBC30.13 to 30.14); the requirement extends the conservation buffer, split into four quartiles with the same retention ratios (RBC30.17 to 30.18), and must be calculated and publicly disclosed at least as often as the minimum capital requirements (RBC30.19).