Capital One 2015 Annual Report Download - page 201

CAPITAL ONE FINANCIAL CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
182 Capital One Financial Corporation (COF)
NOTE 13—REGULATORY AND CAPITAL ADEQUACY
Regulation and Capital Adequacy
Bank holding companies (“BHCs”) and national banks are subject to capital adequacy standards adopted by the Federal Banking
Agencies, including the Final Basel III Capital Rule. Moreover, the Banks, as insured depository institutions, are subject to PCA
capital regulations,which require the Federal Banking Agencies to take prompt corrective action for banks that do not meet PCA
capital requirements. The Final Basel III Capital Rule amended both the Basel I and Basel II Advanced Approaches frameworks,
establishing a new common equity Tier 1 capital requirement and setting higher minimum capital ratio requirements. We refer to
the amended Basel I framework as the “Basel III Standardized Approach,” and the amended Advanced Approaches framework as
the “Basel III Advanced Approaches.”
At the end of 2012, we met one of the two independent eligibility criteria set by banking regulators for becoming subject to the
Advanced Approaches capital rules. As a result, we have undertaken a multi-year process of implementing the Advanced Approaches
regime for calculating risk-weighted assets and regulatory capital levels. We entered parallel run under Advanced Approaches on
January 1, 2015, during which we will calculate capital ratios under both the Basel III Standardized Approach and the Basel III
Advanced Approaches, though we will continue to use the Standardized Approach for purposes of meeting regulatory capital
requirements.
As of January 1, 2015, under the Final Basel III Capital Rule, the regulatory minimum risk-based and leverage capital requirements
for Advanced Approaches banking organizations include a common equity Tier 1 capital ratio of at least 4.5%, a Tier 1 capital
ratio of at least 6.0%, a total capital ratio of at least 8.0% and a Tier 1 leverage capital ratio of at least 4.0%. The Final Basel III
Capital Rule introduced a supplementary leverage ratio for all Advanced Approaches banking organizations, which compares Tier
1 capital to total leverage exposure, which includes all on-balance sheet assets and certain off-balance sheet exposures, including
derivatives and unused commitments. The supplementary leverage ratio minimum requirement of 3.0% becomes effective on
January 1, 2018.
Beginning in the first quarter of 2015, as an Advanced Approaches banking organization, we are required to calculate and publicly
disclose our supplementary leverage ratio. For additional information about the capital adequacy guidelines we are subject to, see
“Part 1—Item 1. Business—Supervision and Regulation.”
The following table provides a comparison of our regulatory capital amounts and ratios under the Federal Banking Agencies’
capital adequacy standards as of December 31, 2015 and 2014.