Regulatory and Capital Adequacy

12 Months Ended

Dec. 31, 2015

Banking and Thrift [Abstract]

Regulatory and Capital Adequacy

NOTE 13—REGULATORY AND CAPITAL ADEQUACY

Regulation and Capital Adequacy

Bank holding companies (“BHCs”) and national banks are subject to capital adequacy standards adopted by the Federal Banking Agencies, including the Final Basel III Capital Rule. Moreover, the Banks, as insured depository institutions, are subject to PCA capital regulations,which require the Federal Banking Agencies to take prompt corrective action for banks that do not meet PCA capital requirements. The Final Basel III Capital Rule amended both the Basel I and Basel II Advanced Approaches frameworks, establishing a new common equity Tier 1 capital requirement and setting higher minimum capital ratio requirements. We refer to the amended Basel I framework as the “Basel III Standardized Approach,” and the amended Advanced Approaches framework as the “Basel III Advanced Approaches.”

At the end of 2012, we met one of the two independent eligibility criteria set by banking regulators for becoming subject to the Advanced Approaches capital rules. As a result, we have undertaken a multi-year process of implementing the Advanced Approaches regime for calculating risk-weighted assets and regulatory capital levels. We entered parallel run under Advanced Approaches on January 1, 2015, during which we will calculate capital ratios under both the Basel III Standardized Approach and the Basel III Advanced Approaches, though we will continue to use the Standardized Approach for purposes of meeting regulatory capital requirements.

As of January 1, 2015, under the Final Basel III Capital Rule, the regulatory minimum risk-based and leverage capital requirements for Advanced Approaches banking organizations include a common equity Tier 1 capital ratio of at least 4.5%, a Tier 1 capital ratio of at least 6.0%, a total capital ratio of at least 8.0% and a Tier 1 leverage capital ratio of at least 4.0%. The Final Basel III Capital Rule introduced a supplementary leverage ratio for all Advanced Approaches banking organizations, which compares Tier 1 capital to total leverage exposure, which includes all on-balance sheet assets and certain off-balance sheet exposures, including derivatives and unused commitments. The supplementary leverage ratio minimum requirement of 3.0% becomes effective on January 1, 2018.

Beginning in the first quarter of 2015, as an Advanced Approaches banking organization, we are required to calculate and publicly disclose our supplementary leverage ratio. For additional information about the capital adequacy guidelines we are subject to, see “Part 1—Item 1. Business—Supervision and Regulation.”

The following tableprovides a comparison of our regulatory capital amounts and ratios under the Federal Banking Agencies’ capital adequacy standards as of December 31, 2015 and 2014.

Table 13.1: Capital Ratios Under Basel III⁽¹⁾

	December 31, 2015					December 31, 2014
(Dollars in millions)	Capital Amount		Capital Ratio	Minimum Capital Adequacy	Well- Capitalized	Capital Amount		Capital Ratio	Minimum Capital Adequacy	Well- Capitalized
Capital One Financial Corp:
Common equity Tier 1 capital(2)	$	29,544	11.1%	4.5%	N/A	$	29,534	12.5%	4.0%	N/A
Tier 1 capital(3)	32,838		12.4	6.0	6.0%	31,355		13.2	5.5	6.0%
Total capital(4)	38,838		14.6	8.0	10.0	35,879		15.1	8.0	10.0
Tier 1 leverage(5)	32,838		10.6	4.0	N/A	31,355		10.8	4.0	N/A
Supplementary leverage ratio(6)	357,794		9.2	N/A	N/A	N/A		N/A	N/A	N/A
Capital One Bank (USA), N.A.:
Common equity Tier 1 capital(2)	$	10,644	12.2%	4.5%	6.5%	$	8,503	11.3%	4.0%	N/A
Tier 1 capital(3)	10,644		12.2	6.0	8.0	8,503		11.3	5.5	6.0%
Total capital(4)	13,192		15.2	8.0	10.0	10,938		14.6	8.0	10.0
Tier 1 leverage(5)	10,644		10.8	4.0	5.0	8,503		9.6	4.0	5.0
Supplementary leverage ratio(6)	118,859		9.0	N/A	N/A	N/A		N/A	N/A	N/A
Capital One, N.A.:
Common equity Tier 1 capital(2)	$	21,765	11.8%	4.5%	6.5%	$	21,136	12.5%	4.0%	N/A
Tier 1 capital(3)	21,765		11.8	6.0	8.0	21,136		12.5	5.5	6.0%
Total capital(4)	23,832		12.9	8.0	10.0	22,881		13.6	8.0	10.0
Tier 1 leverage(5)	21,765		8.8	4.0	5.0	21,136		8.9	4.0	5.0
Supplementary leverage ratio(6)	276,132		7.9	N/A	N/A	N/A		N/A	N/A	N/A

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⁽¹⁾   Capital ratios are calculated based on the Basel III Standardized Approach framework, subject to applicable transition provisions. As we continue to refine our classification of exposures under the Basel III Standardized Approach framework, risk-weighted asset classifications are subject to change.

⁽²⁾   Common equity Tier 1 capital ratio is a regulatory capital measure calculated based on common equity Tier 1 capital divided by risk-weighted assets.

⁽³⁾   Tier 1 capital ratio is a regulatory capital measure calculated based on Tier 1 capital divided by risk-weighted assets.

⁽⁴⁾   Total capital ratio is a regulatory capital measure calculated based on total capital divided by risk-weighted assets.

⁽⁵⁾   Tier 1 leverage ratio is a regulatory capital measure calculated based on Tier 1 capital divided by average assets, after certain adjustments.

⁽⁶⁾  Supplementary leverage ratio is a regulatory capital measure calculated based on Tier 1 capital under the Basel III Standardized Approach divided by total leverage exposure.

Capital One Financial Corporation exceeded Federal Banking Agencies’ minimum capital requirements and the Banks exceeded minimum regulatory requirements and were “well-capitalized” under PCA requirements as of December 31, 2015 and 2014.

Regulatory restrictions exist that limit the ability of the Banks to transfer funds to our BHC. Funds available for dividend payments from COBNA and CONA were $2.9 billion and $359 million, respectively, as of December 31, 2015. Applicable provisions that may be contained in our borrowing agreements or the borrowing agreements of our subsidiaries may limit our subsidiaries’ ability to pay dividends to us or our ability to pay dividends to our stockholders. There can be no assurance that we will declare and pay any dividends.