Tier 2

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).

See also

• Additional Tier 1 (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
• Tier 3