Template:AI Tier 1 capital: Difference between revisions
Jump to navigation
Jump to search
Amwelladmin (talk | contribs) Created page with "Tier 1 capital is the core capital of a bank. It is the most “reliable” form of a bank’s capital — reliability being in the eye of the beholder — and is comp..." |
Amwelladmin (talk | contribs) No edit summary |
||
| Line 1: | Line 1: | ||
[[Tier 1 capital]] is the core capital of a [[bank]]. It is the most “reliable” form of a bank’s capital — reliability being in the eye of the beholder — and is composed of equity capital, disclosed reserves, and certain non-redeemable subordinated securities, | [[Tier 1 capital]] is the core capital of a [[bank]]. It is the most “reliable” form of a bank’s capital — reliability being in the eye of the beholder — and is composed of equity capital, disclosed reserves, and certain non-redeemable subordinated securities called “[[AT1]]s”, which can be converted to common equity or written off if the bank’s capital ratio falls through a trigger. | ||
Tier 1 capital is is used to absorb losses without the bank being required to cease operations. When opportunistic [[AT1]] investors find this out, they get mad. Under Basel III, a bank’s tier 1 and tier 2 assets must be at least 10.5% of its [[risk-weighted assets]], up from 8% under Basel II. | |||
Revision as of 11:59, 24 March 2023
Tier 1 capital is the core capital of a bank. It is the most “reliable” form of a bank’s capital — reliability being in the eye of the beholder — and is composed of equity capital, disclosed reserves, and certain non-redeemable subordinated securities called “AT1s”, which can be converted to common equity or written off if the bank’s capital ratio falls through a trigger.
Tier 1 capital is is used to absorb losses without the bank being required to cease operations. When opportunistic AT1 investors find this out, they get mad. Under Basel III, a bank’s tier 1 and tier 2 assets must be at least 10.5% of its risk-weighted assets, up from 8% under Basel II.