The minimum capital that supervisors require a bank to hold against its risks. It is set by rules rather than by the bank's own view.
Where you will meet it
Regulatory capital comes up in 14 learning outcome notes across the FRM syllabus.
A few of them:
Banks FRM Part I · Financial markets and products
“Regulatory capital is the minimum the supervisor requires, calculated with prescribed formulas such as risk weights.”
Measuring Credit Risk FRM Part I · Valuation and risk models
“Regulatory capital is different.”
Introduction to Credit Risk Modeling and Assessment FRM Part II · Credit risk measurement and management
“The capital adequacy ratio compares regulatory capital with risk-weighted assets, and supervisors set a minimum, for example 8 percent for total capital under the Basel framework, plus buffers.”
Managing Non-Deposit Liabilities FRM Part II · Liquidity and treasury risk measurement and management
“Subordinated debt and medium-term notes give longer funding, and subordinated debt also counts toward regulatory capital.”
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