RAROC

Bankers: What is Your “Well-Capitalized?”

Strategic Management, TKG Perspectives

TKG has had the distinct impression that the bank regulatory community is not pleased with certain limitations and exemptions from Section 171 of the Dodd-Frank Act, the section that covers leverage and risk-based capital requirements. Why do we think this? In a Consent Order dated August 20, 2014, issued by…

Risk Adjusted Return on Capital (RAROC) for Financial Institutions

How do you measure the profitability of lines of business, products, or customers? The simplest form is in dollars. But does that measure the profits against the investment required to generate those profits? For example, the riskiest banking products most likely deliver the greatest dollar profits, all other things being…