Get a demo Create free account →
Free tool · No account needed

Own funds composition checker

Holding enough capital is not the same as holding it in the right form. Article 9 sets three cumulative floors on how your own funds are made up, and a firm can pass the amount test while failing the composition one. Enter your CET1, AT1 and Tier 2 and this checks all three.

IFR Art. 9 · 3 cumulative tests · 56% · 75% · 100% · nothing stored

Check your composition

Runs in your browser · nothing uploaded

You need your own funds requirement to run this. If you do not have it, the own funds requirement calculator works it out from your permanent minimum, fixed overheads and K-factor figures.

Your own funds

Article 9(1) · tiers defined by reference to Part Two of the CRR
Common Equity Tier 1 (CET1) CRR Part Two, Title I, Chapter 2 Paid-up capital and share premium, retained earnings, other reserves and accumulated other comprehensive income, after the deductions in Article 36(1) CRR. Note that Article 9(2) applies the goodwill deduction in full.
Additional Tier 1 (AT1) CRR Part Two, Title I, Chapter 3 Perpetual instruments with no incentive to redeem, written down or converted on a trigger event. Most investment firms hold none — enter zero.
Tier 2 (T2) CRR Part Two, Title I, Chapter 4 Dated subordinated instruments with an original maturity of at least five years, amortised over the final five. Most investment firms hold none — enter zero.
What this means: an indicative check of three ratios against the figures you entered. It assumes your CET1, AT1 and Tier 2 have already been calculated under the CRR eligibility criteria and the Article 36(1) deductions applied — which is the harder half of the exercise. Classification of an instrument into a tier is not always obvious, and several CET1 deductions apply differently for investment firms than for banks. This is not advice.

Composition is tested at all times, not at reporting dates. Pillar 1 Capital tracks your own funds against the requirement continuously and produces the validated IF templates — with free capital monitoring to start.

Create free account →
The structure

Three floors, not three caps

This is the part most summaries get wrong. Article 9 does not cap how much AT1 or Tier 2 you may hold. It sets cumulative minimums, and the caps follow from them.

Test 1

CET1 ≥ 56% of D

At least 56% of your requirement must be met with the highest quality capital. This is the binding constraint for almost every investment firm, because most hold nothing but CET1.

Test 2

CET1 + AT1 ≥ 75% of D

Tier 1 in total must cover three quarters of the requirement. The practical effect is a ceiling: Tier 2 can never contribute more than 25% of your requirement.

Test 3

Total ≥ 100% of D

All three tiers together must at least equal the requirement. Fail this one and you have a capital shortfall, not a composition problem.

Rules reviewed 21 August 2026 · IFR (EU) 2019/2033 Art. 9 and Art. 11 · tiers per Regulation (EU) No 575/2013 Part Two

Scope

What this checker does

It applies three ratios. It takes your tier figures as given, and that is the assumption doing the most work.

It doesTest all three floors

  • Applies the 56%, 75% and 100% cumulative tests in Article 9(1).
  • Shows the shortfall in cash terms for any test that fails, not just a pass or fail mark.
  • Separates a composition failure from an outright capital shortfall — they need different responses.
  • Shows how much Tier 2 is actually counting, given the 25% effective ceiling.
  • Flags where excess Tier 2 or AT1 is sitting on your balance sheet without helping you meet the requirement.
  • Shows the composition as a stack against the requirement, so you can see the headroom.

It does notClassify your instruments

  • Determine whether an instrument qualifies as CET1, AT1 or Tier 2 under the CRR criteria.
  • Apply the Article 36(1) CRR deductions, or the modifications Article 9(2) IFR makes to them.
  • Amortise Tier 2 instruments over their final five years to maturity.
  • Handle the treatment of interim or year-end profits, which needs prior supervisory permission.
  • Account for the additional own funds a competent authority may require under the supervisory review process.
  • Produce anything you can file. It is a check, not a return.

Do you know your requirement yet?

Composition is tested against “D” — the own funds requirement under Article 11. Work that out first, and this check follows in a minute.

Own funds requirement →

Nothing you type here leaves your browser

The check runs entirely in your own browser. No figure you enter is sent to REGREP, written to a log, saved to a database, or passed to any analytics tool.

Reload the page and everything is gone. Continuous monitoring of your own funds happens inside your account, under our data processing agreement.

Questions

About own funds composition

What exactly does Article 9 require?

Own funds are the sum of Common Equity Tier 1, Additional Tier 1 and Tier 2 capital, and three conditions must be met at all times: CET1 must be at least 56% of the own funds requirement, CET1 plus AT1 at least 75%, and all three together at least 100%. They are cumulative floors rather than caps on individual tiers.

Is there a limit on how much Tier 2 I can count?

Not stated directly, but one follows from the second test. Because CET1 and AT1 together must cover 75% of the requirement, Tier 2 can never contribute more than the remaining 25%. Tier 2 above that level still exists on your balance sheet, but it does not help you meet the requirement.

Most investment firms hold only CET1. Does this still matter?

Yes, though for a different reason. If you hold only CET1, all three tests collapse into one: your CET1 must be at least 100% of the requirement. The composition rules only start to bite when you introduce AT1 or Tier 2 instruments, which is usually when a firm raises subordinated debt rather than equity to close a capital gap.

What is the difference between failing test 3 and failing test 1?

Failing test 3 means your total own funds are below the requirement — a capital shortfall, which must be notified to your competent authority immediately. Failing test 1 or 2 while passing test 3 means you hold enough capital but too much of it is in lower-quality forms. That is still a breach, but it is usually remedied by changing the mix rather than raising new money.

Do the deductions matter?

Considerably. Enter CET1 after the Article 36(1) CRR deductions, and note that Article 9(2) IFR applies the goodwill and intangibles deduction in full, without the thresholds and exemptions that banks benefit from under Articles 39 and 48 of the CRR. Firms that carry goodwill from an acquisition are often surprised by how much CET1 that removes.

Do you store the figures I enter?

No. Everything is checked in your browser and discarded when you close or reload the page. Nothing is logged, stored or sent to analytics.

Does this work for a UK firm under MIFIDPRU?

The three ratios are the same — MIFIDPRU 3 sets 56%, 75% and 100% of the own funds requirement under MIFIDPRU 4.3. The underlying tier definitions refer to the UK CRR as it stood at 1 January 2022, so the eligibility criteria can differ in detail. REGREP covers UK IFPR reporting inside the platform.

Enough capital, in the wrong form, is still a breach.

Create a free account and monitor the amount and the composition together, continuously rather than quarterly.

Create free account → See Pillar 1 Capital

No card required · free capital monitoring · nothing stored from this checker