Economic Capital Management Aims at Key Banking Purposes

1. Protection of the bank - How much capital does the bank need?
a. Risk appetite 
b. Compliance with regulatory requirements
c. Protection of target rating
2. Efficient allocation of resources to maximize returns - What are the areas for strategic expansion?
a. Efficient capital utilization
b. Common basis for comparing strategic business areas
c. Measurement of risk-return relationship for products, clients, business units etc.
3. Competitive (i.e. risk-based) pricing of products - How should the bank price regarding risk?
a. Pricing in line with risk and with markets
b. Pricing reflects diversification
c. Avoidance of unprofitable business.