Capital
Capital Conservation Buffer
Also known as CCB
The Capital Conservation Buffer (CCB) is a 2.5% layer of CET1 capital that sits on top of the Basel III minimums. Banks operating inside the buffer face automatic restrictions on dividends, share buybacks, and discretionary bonuses.
Formula
The CCB is not a separate ratio — it is an additional cushion of CET1 that each bank must hold beyond the 4.5% CET1 minimum. The same 2.5% buffer applies on top of the Tier 1 (6.0% + 2.5% = 8.5%) and Total Capital (8.0% + 2.5% = 10.5%) minimums.
Why it matters
Operating inside the buffer doesn't make a bank undercapitalized — but it does limit the bank's ability to return capital. The deeper a bank dips into the buffer, the more severe the payout restriction: a bank with CET1 just above 4.5% can distribute almost nothing. The CCB is how regulators discourage capital depletion during stress without forcing immediate failure resolution.
How to interpret
Healthy banks operate at least 100-200 bps above the buffer-included minimum (so above 9% CET1 for normal banks; higher for G-SIBs). A bank reporting CET1 between 7% and 9% is meeting requirements but constrained on capital return; below 7% triggers escalating payout restrictions under §324.11.
Thresholds
| Range | Label | Interpretation |
|---|---|---|
| ≥ 9% CET1 | Above buffer | Unrestricted capital distributions. |
| 7–9% CET1 | Within buffer | Meets minimum + buffer. |
| 5.75–7% | Restricted | Maximum payout ratio limited. |
| < 5.75% | Severely restricted | Approaching the 4.5% hard minimum. |
Worked example
Frequently asked
Is the capital conservation buffer separate from the stress capital buffer?
For large banks subject to the Comprehensive Capital Analysis and Review (CCAR) stress tests, the CCB is replaced by the Stress Capital Buffer (SCB), which floors at 2.5% but can exceed it based on stress-test results.
What happens if a bank falls into the buffer?
Section §217.11 caps the bank's eligible payout ratio: dropping deeper into the buffer caps dividends, buybacks, and bonuses at a progressively smaller share of net income for the prior four quarters.
Does CBLR have a capital conservation buffer?
No — CBLR is a single 9% threshold with a two-quarter grace period down to 8%. The buffer architecture only applies to banks using the standard risk-based framework.
Sources
- 12 CFR §217.11 — Federal Reserve capital conservation buffer requirements
- 12 CFR §324.11 — FDIC parallel rule
See CCB across 4,335 US banks
BankRegReports ranks every FDIC-insured institution by CCB, refreshed quarterly within 48 hours of FFIEC release.