CAMELS ratings


CAMELS ratings

Supervisory rating of the bank's overall condition is commonly referred to as a CAMELS rating. This rating is based on financial statements of the bank and on-site examination by regulators like the Fed, the OCC and FDIC.

The components of a bank's condition that are assessed: (C) Capital adequacy, (A) Asset quality, (M) Management, (E) Earnings, (L) Liquidity and (S) Sensitivity to market risk (since 1997)

The scale is from 1 to 5 with 1 being strongest and 5 being weakest.

Notice that these ratings are not released to the public but only to the top management of the banking company. This is to prevent a bank run over a bank which has a bad CAMELS rating.

ee also

* Market discipline
* Too-big-to-fail
* Bank condition
* Basel II

External links

* http://www.frbsf.org/econrsrch/wklyltr/wklyltr99/el99-19.html


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