Template:AI Tier 1 capital

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.