Tier 1: Difference between revisions

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''Banking - capital adequacy.''  
''Banking - capital adequacy''  


(T1).
(T1).

Revision as of 08:27, 13 November 2016

Banking - capital adequacy

(T1).

Tier 1 is the highest quality capital.

Contrasted with Tier 2, which is of lower quality.


Tier 1 is sometimes known as 'going concern' loss absorbing capital.


Tier 1 principally comprises equity, subject to regulatory deductions and the inclusion of some preferred shares and some perpetual bonds.

Tier 1 capital is classified in turn as Common Equity Tier 1 (CET1) or Additional Tier 1 (AT1), according to its loss-absorbing quality.


Tier 2 capital comprises eligible long dated subordinated debt.

(Tier 2 is sometimes known as 'gone concern' loss absorbing capital.)


See also