Global banks entered the second half of 2025 carrying CET1 capital ratios that, at a Group 1 average of 14.0% at end-2024 according to the Basel Committee's latest monitoring exercise, sit more than three times the Basel III regulatory floor of 4.5% — yet the aggregate masks a persistent and material divergence between regions that carries distinct implications for capital deployment, lending capacity, and regulatory strategy.

European lenders report the highest aggregate ratios among the jurisdictions covered here. ECB supervisory data published in September 2025 placed the aggregate Common Equity Tier 1 ratio for the eurozone's significant institutions at 16.12% in the second quarter of 2025, up from 16.05% in Q1 and 15.81% a year earlier. That figure is itself a composite concealing wide dispersion within the eurozone: Spain's aggregate ratio stood at 13.18%, the lowest among countries with published figures, while Latvia reported 23.71%. The UK banking sector, surveyed by the Bank of England, recorded a CET1 ratio of 15.4% in Q2 2025, marginally lower than the 15.5% registered in the prior quarter but still reflecting a capital base — £458 billion of CET1 capital against £2,967 billion in risk-weighted assets — that comfortably exceeds both regulatory minima and the Financial Policy Committee's benchmark for system-wide Tier 1 capital requirements of around 14% of risk-weighted assets.

North America presents a materially different picture. The Federal Reserve's June 2025 Dodd-Frank Act Stress Test, which covered 22 large banks, recorded an aggregate CET1 ratio of 13.4% in Q4 2024 for participating institutions. The individual profiles of major US firms in mid-2025 reflect wide intra-market variance: JPMorgan Chase reported a standardised CET1 ratio of 15.0% at end-June 2025, with $284 billion in CET1 capital, while Citigroup stood at 13.5% and Wells Fargo at 11.1% under the Standardised Approach. Bank of America reported 11.5% at end-June 2025. The result is a US aggregate that sits roughly 270 basis points below the eurozone's significant-institution average, although the two figures use different reference dates (Q4 2024 and Q2 2025) and different capital frameworks.

Regional CET1 Ratios: Mid-2025 Snapshot

The Chinese banking system occupies a structurally distinct position. China Construction Bank reported a core Tier 1 capital adequacy ratio of 14.34% as of H1 2025, while ICBC — the world's largest bank by assets — disclosed a CET1 ratio of 13.89% for H1 2025, a modest decline from 14.10% at end-2024. These figures are calculated under China's national capital management rules, which set a minimum CET1 ratio of 5% (7.5% including the conservation buffer, before systemic-importance surcharges), meaning the largest state banks hold buffers of several hundred basis points above their requirements. At the top of the system, the Ministry of Finance issued RMB 500 billion in special treasury bonds in 2025 to recapitalise four large state-owned banks: Bank of China, China Construction Bank, Bank of Communications and Postal Savings Bank of China. In Japan, Sumitomo Mitsui Financial Group (SMBC Group) disclosed a consolidated CET1 ratio of 12.53% at end-June 2025, up from 12.44% at end-March.

The implementation of Basel IV's final elements continues to shape capital measurement in 2025. In the European Union, CRR3 began to apply on 1 January 2025, subjecting banks to the revised standardised approach for credit risk and, critically, a new Standardised Measurement Approach for operational risk. The capital shortfall for EU banks under the fully implemented EU Basel III reform is minimal: the EBA's October 2024 monitoring report (December 2023 data) put the Tier 1 shortfall at €0.9 billion (€5.1 billion in total capital), an amount the EBA said could easily be raised before full implementation. The Basel Committee's monitoring exercise as of December 2024, published in October 2025, found that none of the Group 1 banks in its sample reported a regulatory capital shortfall.

G-SIB Surcharge Landscape: 2025 Update

The Financial Stability Board's November 2025 update to the G-SIB list maintained the count at 29 banks, unchanged from 2024. Three institutions moved between buckets. Bank of America and ICBC were elevated to Bucket 3, raising their required additional capital buffer to 2.0% on top of the standard conservation buffer. Deutsche Bank, conversely, moved to Bucket 1, reducing its G-SIB surcharge to 1.0%. JPMorgan Chase remains the sole occupant of Bucket 4, requiring a 2.5% surcharge — the highest in the framework. The higher requirements for Bank of America and ICBC apply from 1 January 2027.

The EBA's 2025 EU-wide stress test, published in August 2025 and covering 64 banks representing 75% of EU banking sector assets, further contextualised European resilience. Under the adverse scenario, aggregate CET1 depleted by 370 basis points to a floor of 12.1% — down from a starting ratio of 15.8% under CRR3 rules. The aggregate CET1 capital base at end-2024, restated under CRR3, reached €1,421 billion — €120 billion higher than the €1,301 billion (under CRR2, end-2022) at the outset of the 2023 exercise, which the EBA said shows the improvement in EU banks' capital positions.

The TGB assessment is that the aggregate strength of the global banking system's capital position is genuine but should not obscure the structural heterogeneity that defines the current landscape. The approximately 270-basis-point gap between EU significant institutions and US large banks reflects deep-seated differences in risk-weight methodologies, leverage ratio constraints, and the shape of each region's stress-testing regime rather than underlying economic risk. For institutions operating across jurisdictions, this divergence creates real asymmetries in how capital is deployed and how return-on-equity targets are achieved. Looking ahead, the phased implementation of CRR3 in Europe and the ongoing US capital reform process — including the Federal Reserve's proposed averaging of stress test results over two years — are both likely to compress regional differences modestly over the 2026–2028 horizon. The more immediate watch-point is China, where the pace of recapitalisation for smaller lenders will determine whether second-tier banks can sustain credit supply alongside persistently narrow net interest margins. Investors and counterparties monitoring global bank creditworthiness should note that the system-wide comfort of a roughly 14% average carries material dispersion risk: headline adequacy and institutional resilience are not synonymous.