Tier 2

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).

See also

• AT1
• Basel II
• Basel III
• Capital
• Capital adequacy
• Capital Requirements Directive
• Common Equity Tier 1 (CET1)
• CRD IV
• Equity
• Going concern
• Gone concern
• Hybrid
• Subordinated debt
• Tier 1