BIS-重新审视监管资本堆栈

FSIBriefs

No28

Revisitingtheregulatorycapitalstack

Revisitingtheregulatorycapitalstack

ClaudioBorio,RodrigoCoelho,FernandoRestoyandNikolaTarashev

November

November2025

FSIBriefsarewrittenbystaffmembersoftheFinancialStabilityInstitute(FSI)oftheBankforInternationalSettlements(BIS),sometimesincooperationwithotherexperts.Theyareshortnotesonregulatoryandsupervisorysubjectsoftopicalinterestandaretechnicalincharacter.TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheBIS,itsmembercentralbanksortheBasel-basedstandard-settingbodies.

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ISSN2708-1117(online)

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Revisitingtheregulatorycapitalstack1,2

Highlights

•Thepost-GreatFinancialCrisisregulatoryreformshavedirectlycontributedtoamoreresilientfinancialsystemandsupportedsustainablegrowth,butsomeconcreteaspectscanbeimproved.

•Thecomplexityofthecurrentcapitalframeworkandlimitationsintheloss-absorbingcapacityofsomeofitscomponentscanlimittheeffectivenessofbankregulationinachievingcoremicroprudential,macroprudentialandresolutionobjectives.

•Thispaperdiscussesconceptuallythecapitalstack–itscomponentsandtheirdistinctroles.Itthensuggests,atatechnicallevel,howtosimplifythecurrentcapitalframeworkandhowtoenhanceitseffectivenessingeneratingloss-absorbingresourceswhilemaintainingitsstringency.

•Ultimately,theaimofthispaperistoprovideananalyticalreferencefortheongoingdebateonhowtoimprovetheeffectivenessandreducethecomplexityofthecurrentregulatorycapitalstack.

1.Introduction

Thecapitalstackisthebedrockofbankingregulation,servingmultiplepolicyobjectives.Fromamicroprudentialperspective,itseekstosafeguardthesafetyandsoundnessofindividualbanks.Fromamacroprudentialstandpoint,itstrengthenstheresilienceofthefinancialsystem,moderatestheamplitudeofthefinancialcycleandhelpstoreducethelikelihoodthatshockspropagate.Inaddition,partsofthecapitalstackabsorblossestofacilitatetheorderlyresolutionoffailingbanks.

SincetheGreatFinancialCrisis(GFC),thecapital–aswellasliquidity–positionsofbankshaveimprovedsignificantly,andthebankingsector’senhancedresiliencehassupportedsustainableeconomicgrowth.TheaftermathoftheCovid-19crisisisatestamenttobanks’resilience.Incontrastto2008,whenbankswerethesourceofvulnerabilities,theBaselIIIreformunderpinnedtheirroleasashockabsorberduringthepandemic(BCBS(2021)).Inaddition,assessmentsofthelong-termeffectsindicatethatgreaterresiliencedidnotcomeattheexpenseofbanks’costofcapitalandthatthereformsdidnotimpairtheaggregatesupplyofcredittotheeconomy(BCBS(2022)).

Thatsaid,adebatehasemergedonpossiblewaystoimprovethecurrentdesignoftheregulatorycapitalstack.Whiletheavailableevidencedoesnotsuggestthatthisisanurgenttask,thereappearstobescopetoimprovesometechnicalaspectsofthecurrentframework.

Forone,themultifacetednatureofthecapitalstackintroducesundesirablecomplexity.Banksmustcomplywithseveralinterlockingrequirements,includingthoseforCommonEquityTier1(CET1)capital,Tier1capital,totalcapital,variousregulatorybuffers,totalloss-absorbingcapacity(TLAC)andtheleverageratio.Tobesure,someofthiscomplexityisnecessary;butsomeiscounterproductiveandavoidable.Inpractice,assessingtherelativestringencyofthesecapitalrequirementscanbecomequite

1RodrigoCoelho

(rodrigo.coelho@)

,NikolaTarashev

(nikola.tarashev@)

andFernandoRestoy

(fernando.restoy@)

,BankforInternationalSettlements(BIS);ClaudioBorio

(borio.cev@

),formerlyatBIS.TheauthorsaregratefultoWayneByres,RenzoCorrias,AndreaEnria,GastonGelos,RuthWaltersandSamWoodsfortheirhelpfulcommentsandtoClaireRowleyforadministrativesupport.

2TheviewsexpressedinthispublicationarethoseoftheauthorsanddonotnecessarilyreflecttheviewsoftheBIS,itsmembercentralbanksortheBasel-basedstandard-settingbodies.

Revisitingtheregulatorycapitalstack1

difficult,andevenjustcalculatingthemcanbecomeburdensome.Thecomplexitythuscreateschallengesnotonlyforbanksbutalsoforinvestors,observersandevensupervisors,potentiallyunderminingtheeffectivenessoftheprudentialframework.Attheheartofthesechallengesisanimperfectalignmentbetweenthevariousobjectivesoftheframeworkandtheelementsofthecapitalstack.

Moreover,andinpartbecauseofitscomplexity,theframeworkfaceschallengesindeliveringonitscorepurposeoflossabsorption.Notably,whileabankneedstomeetseveralminimumrequirementstobeconsideredviable,instrumentseligibleforsomeoftheserequirementsneednotimprovethebank’sviability.Conversely,instrumentsthatdounderpinviabilitycanalsomeetrequirementsforresolution,introducingpossibleinconsistenciesintheframework.Further,whileCET1capitalhasbeenhighlyeffectiveinabsorbinglossesonagoing-concernbasis,AdditionalTier1(AT1)instrumentshaveexhibitedlimitations,notablyinperiodsoffinancialstress.And“usable”buffershaveproveninsufficient,especiallyinthefaceofexogenous–andthusinherentlyunpredictable–shocks,suchastheCovid-19crisis.

Theselimitationsraisequestionsaboutthecurrentdesignofthecapitalstack.Towhatextentisithelpingtheregulatoryframeworktoachieveitsdiverseobjectives?Couldthesebemetinamorestreamlinedandefficientmanner?Thesequestionsunderscoretheusefulnessofacriticalevaluationofthecapitalstack’sdesign.

Thispaperseekstocontributetothisimportantdebate.Basedonanevaluationofthecurrentcapitalstack,itanalyseshowtostrikeabetterbalancebetweenfunctionalityandsimplicity.Importantly,thepaperdoesnotsuggestanyweakeningofthecurrentframework–notleastbecausetheavailableevidencedoesnotcallforit.

Whiletheevaluationisbroad,someimportantregulatoryaspectsareoutofscope.First,theanalysisdoesnotcoverinanydepthjurisdiction-specificarrangements(egaslaidoutinPillar2ofBaselIII).Thefocusisoninternationalstandardsandcommonelementsacrossjurisdictions.Second,byconcentratingonrequirementsintermsofrisk-weightedratios,theanalysisleavestheleverageratiointhebackground.Ittakesitforgrantedthatitisappropriatetorelyonaleverageratioasabackstoptothelimitationsofriskweights.Third,thepaperdoesnotcovercoordinationissuesamongauthorities–iethosewithmicroprudentialmandates,thosewithmacroprudentialmandatesandthoseinchargeofresolution.Thatsaid,thesuggestedsimplificationcanfacilitatecoordination.Finally,whilethepapertouchesonissuesrelatedtothecalibrationoftheframework,itsprimaryfocusisontheoverallstructureofthecapitalstack,leavingthequantificationofitscomponentsforfutureanalysis.

Therestofthepaperproceedsasfollows.Section2offersageneralanalyticalframeworkthatlaysouttheobjectivesofthecapitalstackandmapsthefunctionsofitscomponentstovariousconditionsinwhichabankorthebankingsystemmayfinditself(“states”).Buildingonthisanalysis,section3assessescurrentarrangements,andsection4putsforwardideasonhowtoimprovethem.Section5concludes.

2.Thecapitalstack:policyobjectivesandfunctionsacrossstates

Thecapitalstackanditsvariouscomponentsservethreeinterconnectedobjectives.Whenabankremainsagoingconcern,thecomponentsofthestackservemicroprudentialandmacroprudentialobjectives.Whenabankbecomesagoneconcern,theyplayacriticalroleinfacilitatinganorderlyresolution.3Achievingtheseobjectivescontributestotheoverarchingaimofsafeguardingfinancialstability.

3Theterms“goingconcern”and“goneconcern”originateinauditing."Goingconcern"referstoanentity'sabilitytocontinueitsoperationsfortheforeseeablefuture(typicallyover12monthsfromthereportingdate)withoutrequiringliquidationormajorrestructuring.Incontrast,"goneconcern"meansthattheentityisnolongerviableasagoingconcern,indicatinganexpectationofbusinesscessation,assetliquidationorsignificantrestructuringduetofinancialoroperationalchallenges.

2Revisitingtheregulatorycapitalstack

Revisitingtheregulatorycapitalstack3

Tobetterunderstandtheimplicationsforthedesignofthecapitalstack,weproceedintwosteps.Wefirstexaminethethreepolicyobjectivesinmoredetail.Wethenconsidertheroleoftheelementsofthestackacrossvariousstates(ieasrisksandlossesevolveinthe“timedimension”)andacrossinstitutionsofdifferentsystemicsignificance(the“cross-sectionaldimension”).

2.1Policyobjectives

Microprudentialandmacroprudentialobjectives4

Regardlessofwhethertheperspectiveismicro-ormacroprudential,thegoalofthecapitalstackistoensuresufficientloss-absorbingcapacityforthebanktocontinueoperating–ietoremainagoingconcern–evenunderadverseconditions.5Thetwoperspectivesdifferintermsofhowtheytreatbanks.Whilethemicroprudentialperspectivetreatsbanksonastand-alonebasis,itsmacroprudentialcounterparttreatsthemexplicitlyaspartofasystem.Accordingly,thetwoperspectivesunderpindifferentrolesofthecapitalstackinboththetimeandcross-sectionaldimensions.

Inthetimedimension,akeydifferenceiswhetherrisksandlossesareregardedasindependentofthecollectivebehaviourofinstitutionsorasinfluencedbyit.Themicroprudentialperspectiveignoresfeedback;6themacroprudentialoneputsitfrontandcentre.Banks’collectiveretrenchment,throughassetfiresalesandcreditcutbacks,canmakethemworseoffasagroupbyamplifyingcostsforthefinancialsystemandfortherealeconomy(a“fallacyofcomposition”).Hence,toaddressascenarioinwhichsystem-widelossesmount(orthreatentomount),themacroprudentialperspectivehighlightstheneedforloss-absorbingcapacityinaformsuitabletolimitretrenchment.7Byignoringfeedback,themicroprudentialperspectiveomitstheseconsiderations.Thus,itemphasisestheneedtoconserve,ratherthandrawon,loss-absorbingcapacityintimesofstress.

Inthecross-sectionaldimension,thetwoperspectivesdifferintheneedtotailorthecapitalstacktothesystemicsignificanceofindividualbanks.Themicroprudentialperspectiveignoresthisneed.Bycontrast,themacroprudentialperspectivecallsforloss-absorbingcapacitycommensuratewithabank’scontributiontosystem-widerisk,orits“systemicfootprint”.Forinstance,allelseequal,themacroprudentialperspectivecallsforextraloss-absorbingcapacityforbanksthataccountforalargershareofthefinancialsystem.8

Orderlyresolutionobjective9

Abankisconsideredagoneconcernwhentherelevantauthoritydeterminesthatitisfailingorislikelytoreachthepointofnon-viability(PoNV)–iethepointwherethebankcannolongercontinueoperatingwithoutasignificantpublicintervention.10Inthisstate,thecapitalstackcontinuestoabsorblosses,mainly

4Foranelaborationofthedistinctionbetweenthemicroprudentialandmacroprudentialperspectives,seeBorio(2003).

5Outofscopeisanotherkeyroleofthecapitalstack:steeringtherisk-takingincentivesoftheinstitution.

6Inpractice,actualmicroprudentialtoolsmayindirectlyaccountforsomefeedbackeffectsevenwhennotexplicitlydesignedtodoso.Forexample,thiswouldbethecaseiftheparametersusedtocalibrateriskweightsarebasedonhistoricaldownturns.

7Thisistheissueoftheso-called“usability”ofthebuffers(seealsoSection2.2below).

8SeeegTarashevetal(2016).

9Inthetimedimension,asystem-wideperspectiveinresolutioncallsforapproachestosystemiccrisismanagementthatlimittheimpactontheeconomy.Thisaspect,however,fallsoutsidethescopeofthispaper.

10Abankisconsideredagoingconcernifithasnotreachedthepointofnon-viability;otherwise,itisclassifiedasagoneconcern.

4Revisitingtheregulatorycapitalstack

toenabletheorderlymanagementofthebank’sfailure,hereafterreferredtoas“resolution”.11Thisreducesthecostofthefailureforcreditors,forthefinancialsystemandfortaxpayers.

Thespecificroleoftheloss-absorbingresourcesforagoneconcerndependsontheresolutionstrategy.Inaregularliquidationprocedure,lossabsorbencyhelpsprotectdepositors,therebymitigatingtheriskthatauthoritiesneedtobailoutthebank–withtaxpayermoney–forpoliticaleconomyreasons.Intransferresolutions,loss-absorbingliabilitiesincreasethechancesoffindingsuitableacquirerstotakeoverafailingbank’sassetsandremainingliabilities(egdeposits).12Finally,inabail-instrategy,loss-absorbingliabilitiesultimatelygeneratecapitalthatallowsthebanktomaintainitscriticalfunctionsafterresolution.Sinceabail-instrategyaimstopreserveallorsubstantiallyallofthefailedbanks’operations,theattendantloss-absorbencyneedsaretypicallyhigherthanforatransferand,especially,forliquidation.13

Inparallelwiththecross-sectionaldimensionofprudentialobjectives,orderlyresolutioncallsforloss-absorbingresourcesthatincreasewiththebank’ssystemicsignificance.Thus,theseresourceswouldneedtoincreasemorethanproportionatelywiththebank’ssize.Inapiecemealassetliquidation,forinstance,creditors’lossesgrowmorethanproportionatelywiththevolumesinvolved.Non-linearitiesalsoapplytodismantlingortransferringcomplexbusinesslinesorrestoringthemtoviability.Moregenerally,uncertaintyaboutthelikelihoodofanorderlyresolutionisgreaterformoresystemicallysignificantbanks–andsoisthepotentialforcontagionfromadisorderlyoutcome–callingforahighersafetymarginofresources.Thesystemicbenefitsaredisproportionatelygreaterifthebankishighlyinterconnectedand/orprovidesserviceswithfewornodirectsubstitutes–asisparticularlythecaseforglobalsystemicallyimportantbanks(G-SIBs).

2.2Mappingbetweeneconomicstatesandthecapitalstack

Understandingloss-absorbingcapacityinthetimedimensionrequirestracinginmoredetailhowtheroleofthecapitalstackevolvesasthebankmovesacrosseconomicstates.Onlythenisitpossibletofullyappreciatethedifferencebetweenbuffersandminimaorbetweeninstrumentsalongthestack,egequityorjuniordebt.14Thiscontrastswiththecross-sectionaldimension,forwhichthegeneralprincipleisstraightforward–lossabsorptionshouldbecommensuratewiththebank’ssystemicfootprint,regardlessofthestate.

Tofixideas,considertherolethatbanks’resourcesshouldplayinthreehighlystylisedstatesinasimplifiedscenario.

State1:Asystem-wideshockthreatenstoseriouslyweakenbanks’lossabsorbency,leadingthemtodeleverageasagroup.Thisretrenchmentcouldfurtherweakenthefinancialsystem,theeconomyand,inturn,theretrenchingbanksthemselves.

Inthisstate,theobjectiveofloss-absorbingcapacityistolimitthebanks’retrenchment(amacroprudentialobjective).Thus,banks’managementshouldbeabletovoluntarily“consume”loss-absorbingcapacitywithoutfacingregulatorypenalties.Thisisachievedwitharegulatoryrequirementthat

11Theterm“resolution”isusedherewithaslightlybroaderscopethaninFinancialStabilityBoard(FSB)standards,whichspecificallyidentifythepreservationoffailingbanks’criticalfunctionsastheprimaryresolutionobjective.Forfurtherdetails,seetheFSB’s“

Keyattributesofeffectiveresolutionregimesforfinancialinstitutions

”.

12SeeRestoy(2023)foranelaboration.

13Inanopen-bankbail-in,theinstitutioncontinuestooperateduringtheresolutionprocess,ensuringthecontinuityofcriticalfinancialserviceswhileitsliabilitiesarebeingrestructured.Incontrast,aclosed-bankbail-ininvolvesthetemporaryclosureoftheinstitution,duringwhichitsoperationsaresuspendedastheresolutionauthorityrestructuresthebank’sliabilitiesanddeterminesthepathforward,egliquidationortransfer.

14Juniordebtincludesliabilities,suchasAT1andTier2instruments,whichareseniortoCET1capitalbutaresubordinatetoseniorliabilities–suchasdeposits–inthehierarchyofclaimsduringliquidation.

Revisitingtheregulatorycapitalstack5

canbereleased–an“adjustable”or“releasable”buffer–toaddtotheresourcesfreelyavailabletomanagement–thebanks’“managementbuffer”.15

State2:Bank-specificshocksmateriallyweakenthelossabsorbencyofoneormorebanks.

Inthisstate,aregulatorycapitalrequirementwouldseekto:(i)ensurethatabankabsorbslosseswhileremainingagoingconcern;and(ii)promptaswiftreplenishmentoftheloss-absorbingcapacity(amicroprudentialobjective).Thisobjectiveisachievedwitharegulatorybufferthatcanbedippedintobutsubjecttopenalties(“non-adjustable”or“fixed”buffer).Inturn,thepenaltiescanbecomeprogressivelymorestringentwiththesizeofthedipandasthebankapproachesthePoNV.Forinstance,inalightdip,therestrictionscouldprovideincentivestorecapitalise(eglimitationsondistributions);inaheavyone,theycouldrequiretheimplementationofrecoverymeasures.Thespecificpenaltiescouldbebasedonrulesorlefttoauthorities’discretion,dependingontheperceivedprosandconsofthetwostrategies.16

State3:Recoveryfailsandthebankbecomesnon-viable.

Anorderlyresolutionrestsonatwo-prongedapproach.First,aminimumcapitalrequirementdefinesthePoNV,belowwhichthebankisnolongerconsideredviableandhencebecomesagoneconcern.Atthatpoint,theauthoritytakesfullcontrolofthebank,whichentersresolution;17thatis,thePoNVcoincideswiththepointofentryintoresolution(PoER).Second,anadditionalrequirementaimstoensuresufficientloss-absorbingresourcesforanorderlyresolution.

Thedistinctmotivationforeachprongoftheapproachunderpinstheformofthecorrespondingloss-absorbingresources.Fromaregulatoryperspective,aviablebankisonethathasenoughequitycapitaltoweatheradverseshocksandhonourallitsdebt–ieremainbalancesheetsolvent–withaprobabilitynotlowerthanahightargetlevel.18Thus,theloss-absorbingcapacitythatdefinesthePoNV–ietheamountofcapitalthatjustmeetsthetargetsolvencyprobability–musttaketheformofequity.

Bycontrast,anyadditionalrequirement–ieresourcesearmarkedforresolution–mustbeinaformotherthanequity.Otherwise,thetargetsolvencyprobabilitywouldbeexceeded–aninternalinconsistency.However,theresourcesthatthisadditionalrequirementgeneratesmustbetransformableintoequity,astheywouldbeused–whenequitycapitalisexhausted–torestorethebank’sviability(iehavecapitalinexcessofthePoNV)ortotransferorliquidate(partsof)itsbalancesheet.Debtinstrumentsthatarejuniortodepositsaretheobviouscandidatesforthisrole.19

Thedistinctmotivationsoftheminimumandresolution-specificrequirementsalsohaveimplicationsforthepenaltiesappliedtobreaches.Inparticular,thepenaltyforbreachingtheequityminimumthatdefinesthePoNVisentryintoresolution(theincumbentmanagementlosescontrolofthebank);thepenaltyforbreachingtheadditionaldebtrequirementmustbeweaker.Afterall,thisrequirementisnotdesignedtokeepthebankviable,buttobeusedonlyifthebankbecomesnon-viable.TherequirementdoesnothelptoidentifythePoNVbuttoensureenoughresourcesbeyondthePoER.Inprinciple,thepenaltiesforbreachingtheminimumdebtrequirementcouldberelativelyminorwhenthebankoperateswithplentyofequitycapital–iewithalargemanagementbuffer–butshouldbecomeincreasinglystringentasthePoNVisapproached.Forinstance,authoritiescouldrequirethebankto

15Toaddressapotentialsequenceofsystematicshocks,anadjustablebufferwouldbereleasedininstalments.SeeDrehmannetal(2020).

16Forexample,intheUnitesStates,arule-basedstrategybasedonmultipleindicatorsthatgobeyondcapital–PromptCorrectiveAction(PCA)–hasbeeninplaceforalongtime.

17SeeDewatripontandTirole(1994)forahighlystylisedanalysisoftheroleofauthoritiesinthecaseofbanksincomparisonwiththatofcreditorsofatypicalfirm.

18Thisdefinitionofviabilityhasunderpinnedthecalibrationofbanks’minimumcapitalrequirementsinBaselIIandBaselIII.

19Protecting(retail)depositors,quiteapartfrombeingjustifiedbytheirinabilitytoeffectivelymonitorthebank,alsoreducestheincentivestobailoutthebanksbyusingtaxpayers’resources.

6Revisitingtheregulatorycapitalstack

developandimplementacredibleplantoaddressthebreachwithinaspecifiedtimeframe,whichshortensasequitycapitalapproachesthePoNV.

Astheanalysisindicates,thetwotypesofloss-absorbingresources–thosedefiningthePoNVandtheadditionalcomponentearmarkedforresolution–playsimilarbutdistinctroles.TheequitythatisnotwipedoutbythebreachofthePoNVandalljuniordebtinstrumentsareavailabletobeconsumedinresolution.Inthissense,theyaregoneconcerncapital.20Buttheminimumequitycapitalrequirementisalsointendedtoensuretheviabilityofthebankinthefirstplace.Inthissense,itcouldberegardedasgoingconcerncapital.21

Incontrasttothestylisedscenariothissectionhassketchedout,aminimumrequirementdoesnotfullypindownthePoNVinreality.Onesinglenumbercannotbeuptothetask.Thisisallthemoresoifthatnumberisbasedonaccountingapproachesthatarenotsufficientlyforward-looking.Insomecases,forinstance,marketparticipantsmaytaketheviewthatthebankisnotviableevenwhenitoperateswellabovetheminimum,therebycuttingoffitsmarketaccessandstarvingitofthecashflowthatwouldkeepitafloat(aliquiditycrisis).Insuchanenvironment,oriftheyindependentlyreachtheviewthatthebankis“likelytofail”,authoritieswilltriggerresolutionwhentheinstitutionisstillmeetingminimumcapitalrequirements.22,23Thesereal-lifecomplications,however,innowayaltertheroleofthevariouselementsofthecapitalstackasoutlinedinthissection.

3.Currentarrangements:featuresandlimitations

Whilecurrentinternationalregulatoryarrangementshaveclearsimilaritieswiththebasicfeaturesoftheaboveconceptualframework,theyalsodifferinimportantrespects(Table1).Thesedifferencesreflectamismatchbetweenthedesignofthecapitalstackandtheintendedroleofitsvariouscomponents.Considersimilaritiesanddifferencesinturn.

20Byextension,anauthoritythatwishestooperatewithmoreequityinresolutionwouldraisethetargetsolvencyprobabilityunderpinningthePoNV.

21Inthecurrentframework,Tier1minimumcapitalrequirementsareinfactreferredtoas“goingconcern”capital,possiblyforthisreason,eventhoughtheyaretobeconsumedonlyinthe“goneconcern”state.

22Indeed,thequestionofhowbesttousemarketinformationinthiscontextisbothdifficultandimportant.SeeegBorio(2025).

23Conversely,intheabsenceofanymarketpressure,authoritiesmayallowatemporarybreachoftheminimumaslongasmanagementimplementsacredibleplantoremedythebreachandensurethebank’slong-termviability.

Revisitingtheregulatorycapitalstack7

Currentcapitalstack

Table1

Component

Objective1

Nature

Eligibleinstruments

CET1

AT1

T2

Otherjunior

debt

Buffers

CCyB

CCoB

G-SIB

MinrequirementsCET1

AdditionalTier1component3

Additionaltotalcapital

component3

AdditionalTLACcomponent3

MaPTD

MiP/MaP2TD

MaPCSD

MiP

MiP

Resolution

Resolution

Adjustable

buffer

Non-adjustable

buffer

Non-adjustable

buffer

Non-adjustable

Non-adjustable

Non-adjustable

Non-adjustable

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

✓

AuthoritieshaveflexibilitytointroducePillar2requirements(“add-ons”)ineachpartofthecapitalstackaccordingtojurisdiction-specificfactors.Insomejurisdictions,suchadd-onsmaybemetnotonlywith