LCR Calculator
Calculate Liquidity Coverage Ratio for Basel III compliance and banking stress testing
Calculate LCR (Liquidity Coverage Ratio)
Liquid assets easily convertible to cash
Securities that can be quickly sold in the market
Expected cash outflows during a 30-day stress period
LCR Results
Formula: LCR = (Highly Liquid Assets / Expected 30-day Cash Outflows) × 100%
Basel III Requirement: LCR must be ≥ 100% for regulatory compliance
Status: Below Basel III requirement (<100%)
Risk Analysis
Example Calculation
Bank Alpha Example
Location: United States
Cash and cash equivalents: $1,000,000
Marketable securities: $750,000
Expected 30-day cash outflows: $1,500,000
Calculation Steps
1. Highly Liquid Assets = $1,000,000 + $750,000 = $1,750,000
2. Expected Cash Outflows = $1,500,000
3. LCR = ($1,750,000 ÷ $1,500,000) × 100% = 116.67%
Result: ✅ Compliant with Basel III (≥100%)
Basel III LCR Requirements
Minimum Requirement
LCR ≥ 100%
Required for regulatory compliance
Stress Testing
30-day liquidity stress
Severe but plausible scenario
Monitoring
Daily calculation
Continuous compliance required
LCR Components
Highly Liquid Assets
Cash, central bank reserves, government securities
Marketable Securities
Tradeable assets with active markets
Net Cash Outflows
Expected outflows minus inflows
30-Day Period
Short-term liquidity horizon
Understanding the Liquidity Coverage Ratio (LCR)
What is LCR?
The Liquidity Coverage Ratio (LCR) is a Basel III regulatory requirement that measures a bank's ability to meet its short-term obligations during a 30-day liquidity stress scenario. It ensures banks maintain sufficient high-quality liquid assets to survive severe market disruptions.
Why is LCR Important?
- •Regulatory compliance under Basel III
- •Risk management and stress testing
- •Investor confidence and market stability
- •Financial system resilience
LCR Formula Breakdown
LCR = (Highly Liquid Assets / Expected Net Cash Outflows) × 100%
Highly Liquid Assets = Cash + Marketable Securities
- LCR: Liquidity Coverage Ratio (percentage)
- Highly Liquid Assets: Level 1 and 2 assets per Basel III
- Net Cash Outflows: Stressed 30-day outflows minus inflows
- Minimum Requirement: 100% under Basel III
Note: Banks must maintain LCR ≥ 100% at all times. Higher ratios indicate stronger liquidity positions.
LCR Interpretation Guide
LCR ≥ 130%
Excellent liquidity position. Well-capitalized with strong buffer above regulatory requirements.
100% ≤ LCR < 130%
Adequate liquidity. Meets Basel III requirements with reasonable safety margin.
LCR < 100%
Regulatory non-compliance. Immediate action required to improve liquidity position.