The Debt/equity ratio is a difficult one to deal with for banks. Even though various websites will display debt/equity ratios for banks, it is really not a meaningful figure. The whole concept of debt is quite different for banks. Along with their deposits, it is part of their operations rather than being used for expansion.
Those websites that put it in do so to maintain consistency between their page displays.
If we did put it in, then all the banks would get filtered out by the default debt/equity level of 50% since it usually over 100%. Hence, we set it at 0.
In the USA a more meaningful debt ratio for banks is the total risk-based capital ratio, the ratio of total capital divided by risk-weighted assets. The Federal Reserve Board has established guidelines that all banking organizations are required to maintain a minimum 8 percent total risk-based capital ratio, including a Tier 1 Capital ratio of 4 percent.
Banking companies must stay well capitalized to receive favorable regulatory treatment on acquisition, and other expansion activities and favorable risk-based deposit insurance assessments. This figure is published once a year in the notes of the company's annual report.
Tier 1 capital is based on equity of the company and can absorb losses without a bank being required to cease trading. It provides higher protection to investors.
In Australia this ratio is referred to as the capital adequacy ratio.
