CAMELS rating system

What is the CAMELS rating system?

Also known as CELS rating, the CAMELS rating system is a regulatory rating system that is used to determine a bank’s overall condition. The system, which rates from 1 – 5, assesses capital adequacy, assets, management capability, earnings, liquidity and sensitivity.

Where have you heard about the CAMELS rating system?

The system was first developed in the US and is practiced at every bank and credit union in the United States. This system is also carried outside of the US by many banking supervisory regulators.

What you need to know about the CAMELS rating system.

The ratings are given based on analysis of financial records and onsite assessments carried out by assigned supervisory regulators. In the U.S the Office of the Comptroller of the Currency, the Federal Reserve and the National Credit Union Administration are among these regulators. If a bank scores an average of less than two, then they are thought of as elite institutions. If a bank scores above three, they are considered to be inadequate. These ratings are never made public, but they are shared amongst those in the highest managerial positions.