Company: BBD
Filing Date: 2025-03-31
Form Type: 20-F
Source: 0001292814-25-001244
Chunk: 244

Company: BANK BRADESCO
Filing Date: 2025-03-31
Form: 20-F
Item: Item 5
Chunk 244
---
,955/21, as amended, the RE of a financial institution consists of Tier I Capital plus Tier II Capital, and is used when setting its operating limits.
 
·   Tier I Capital is aimed at helping the bank to remain solvent, that is, remain as a going concern. Since
               the entry into force of Basel III, Tier I Capital was divided into two subgroups:            
------------------------------------------------------------------------------------------------------------

o   Common Equity composed, basically by shares and reserves; and
-----------------------------------------------------------------

o   Additional Equity composed, basically by instruments that are analogous
                    to hybrid capital and debt instruments.                
---------------------------------------------------------------------------

·   Tier II Capital is contingent capital, subject to conversion into equity in the case of insolvency.
-------------------------------------------------------------------------------------------------------
 In normal market conditions, financial institutions must maintain an excess capital in relation to the minimum requirements in an amount greater than Additional of Common Equity (ACP), corresponding to the sum of the Additional of the Capital Conservation Buffer, the Countercyclical Capital Buffer and of Systemic Importance. Non-compliance with the rules of ACP results in restrictions on the payment of dividends and interest on own capital, distribution of net surplus, share buybacks, reduction of share capital, and variable compensation to its managers.
 According to CMN Resolution No. 4,958/21, banks must maintain minimum capital requirements, including: (i) a minimum of 8.0% of common equity (shares, capital reserves and accumulated profits, after subtracting the regulated deductions); (ii) 9.5% of Tier I Capital (common equity plus the additional equity); and (iii) an index of total capital of 11.5%, with 3.5% related to the ACP installments.
 CMN, through Resolution No. 4,958/21, as amended by CMN Resolution No. 5,194/24, determined the minimum requirements of the Reference Equity (RE), of Tier I and Common Equity, in addition to the Additional of Common Equity (ACP). The Resolution defines the percentages to be added to the RWA amount for calculation of the value of the Additional Conservation of Common Equity (ACP Conservation) installment in the following way: (i) 2.0%, in the period from October 1, 2021 to March 31, 2022; and (ii) 2.5% from April 1, 2022. This measure aims to expand lending capacity, by widening the gap of capital, giving more space and security for banks to maintain their