Regulators are not the only ones who are concerned about banks' capitalisation; management and shareholders also want to ensure the level of capital is sufficient to meet shareholder goals. But the relationship between the groups results in the need for a fine balancing act. Capital management involves balancing potentially conflicting bank stakeholders (see diagram). The first group, the risk stakeholders, includes regulators and rating agencies, which view capital relative to risk protection. The second group is the return stakeholders, such as shareholders and management, who view capital relative to growth and returns.
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