Risk-Weighted Assets
RWA. A banks total assets adjusted for credit risk under Basel III: each asset class carries a regulatory risk-weight reflecting its loss probability. Cash and short-term US Treasuries carry near-zero weights; residential mortgages typically 35-50 percent; commercial real estate loans up to 100 percent; unsecured corporate loans up to 100 percent; some equity exposures up to 250 percent or more. Capital ratios are expressed as capital divided by RWA, so two banks of the same nominal size can have very different capital requirements depending on the risk-weight profile of their portfolios.
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Related terms
10Y Treasury · Altman Z-Score · Asset Sensitivity · Basel III · Bond ETF · Bretton Woods
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