what is the tier 1 leverage ratio 
the tier 1 leverage ratio measures a bank s core capital relative to its total assets the ratio looks specifically at tier 1 capital to judge how leveraged a bank is based on its assets tier 1 capital refers to those assets that can be easily liquidated if a bank needs capital in the event of a financial crisis the tier 1 leverage ratio is thus a measure of a bank s near term financial health the tier 1 leverage ratio is frequently used by regulators to ensure the capital adequacy of banks and to place constraints on the degree to which a financial company can leverage its capital base tier 1 leverage ratio formula tier 1 leverage ratio tier 1 capital consolidated assets 1 0 0 where tier 1 capital common equity retained earnings reserves plus certain other instruments begin aligned text tier 1 leverage ratio frac text tier 1 capital text consolidated assets times 100 textbf where text tier 1 capital text common equity retained earnings text reserves plus certain other instruments end aligned tier 1 leverage ratio consolidated assetstier 1 capital 100where tier 1 capital common equity retained earnings reserves plus certain other instruments 