Tier 2: Difference between revisions
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imported>Doug Williamson (Mend link.) |
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''Banking - capital adequacy'' | 1. ''Banking - capital adequacy.'' | ||
(T2). | (T2). | ||
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It is generally loss-absorbing only when a bank has reached the point of non-viability (PONV). | It is generally loss-absorbing only when a bank has reached the point of non-viability (PONV). | ||
2. ''Tier 1.'' | |||
Any classification lower than Tier 1, but higher than Tier 3 (if there is a Tier 3). | |||
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* [[Subordinated debt]] | * [[Subordinated debt]] | ||
* [[Tier 1]] | * [[Tier 1]] | ||
* [[Tier 3]] | |||
[[Category:Accounting,_tax_and_regulation]] | [[Category:Accounting,_tax_and_regulation]] | ||
Latest revision as of 13:58, 8 June 2025
1. Banking - capital adequacy.
(T2).
Tier 2 capital includes eligible long dated subordinated debt and certain hybrid instruments.
Tier 2 is of lower loss-absorbing quality than Tier 1 capital, and its eligible amount for capital adequacy calculation purposes is restricted accordingly.
Tier 2 is sometimes known as 'gone concern' loss absorbing capital.
It is generally loss-absorbing only when a bank has reached the point of non-viability (PONV).
2. Tier 1.
Any classification lower than Tier 1, but higher than Tier 3 (if there is a Tier 3).
