SendPay Business
Man in a suit smiling in a meeting room

What are bank capital requirements? Why banks must hold a buffer

By SendPay Business · · 2 min read

Ask about this page:Ask ChatGPTAsk ClaudeAsk Perplexity
Your own money app
  1. Name it and pick your colours
  2. Choose what it does
  3. Launch when you are ready

Capital requirements are rules that make banks fund part of their lending with their own money, such as shareholders' equity, rather than only with deposits and borrowing. That buffer absorbs losses so the bank can keep going when some loans go bad.

What capital means

Capital is the part of a bank's funding that can absorb losses, mainly shareholders' equity and retained profits. Deposits are not capital, because the bank owes them back to customers.

Man in a suit on the phone at a desk

The Basel rules

International standards from the Basel Committee on Banking Supervision, known as Basel III, set minimum capital ratios based on how risky a bank's assets are. National regulators, such as the Prudential Regulation Authority in the UK, apply them and can add extra buffers.

Try it

Name your platform and watch it come to life

Type a name, tap a colour and pick what it does. The phone changes as you go.

Colour

What it does

Build mine

Design and preview your whole platform free, then launch when you are ready.

Capital vs liquidity

  • Capital protects against losses, such as loans that are not repaid.
  • Liquidity is having enough cash to pay people who want their money now.
  • A bank can have plenty of capital and still face a liquidity crunch.
  • Regulators set separate rules for each.
Woman in a blue shirt using a laptop

Where SendPay fits

SendPay is a technology company, not a bank, and does not take deposits. SendPay platforms are powered by licensed partners, and SendPay tells you in writing which licences apply to your platform before you launch.

Woman in glasses working on a laptop

How it works

Money on its way
  1. Pick who to pay and type the amount
  2. Tap send and it is on its way
  3. It lands in their account

Why sign up

Create your free SendPay account

It's all about creating your own financial platform with ease. Start with a free account today.

  • A free business accountOpen it in about a minute with your business name, email, password and mobile. No card and no documents to start.
  • Get paid from day oneTake card payments, and share your own payment link and invoices so customers pay in a click.
  • A free business websiteFree to build, free to publish and free to keep, with unlimited visits.
  • Your own financial platformDesign and preview your whole platform free, then launch when you are ready.
Create a free business account Create a free websiteStart building your platform

SendPay Business is a technology company, not a bank. Accounts, cards and payments are powered by licensed partners.

Questions people ask

How is a capital ratio worked out?

Try our free bank capital ratio calculator with any balance sheet and risk weights.

Capital ratio calculator →
What is a bank run?

When many savers withdraw at once.

Bank runs →
What is deposit insurance?

Protection for savers if a bank fails.

Deposit insurance →
E-money institution vs bank

The key differences.

EMI vs bank →

Read next

Spotted a mistake or something out of date? and we'll fix it. How our guides are made

This guide is general information, not legal or financial advice. SendPay Business is a technology company, not a bank, and does not take deposits; regulated services on the platforms are provided by licensed partners. Other companies named in this guide are reference points only and are not affiliated with SendPay Business.