4.1. Introduction

(1) This Chapter sets out capital adequacy requirements for a Bank.

(2) A Bank’s total Regulatory Capital is the sum of its Tier 1 Capital and Tier 2 Capital. The categories and elements of Regulatory Capital, as well as the limits, restrictions and adjustments to which they are subject are set out in this Chapter.

(3) Capital adequacy and capital management must be an integral part of a Bank’s overall governance and its bank-wide risk management process. Capital management must align the Bank’s risk appetite and risk profile with its capacity to absorb losses.