Tier 2

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Banking - capital adequacy


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