Science Fair Project Encyclopedia
Tier 2 capital
Tier 2 capital is a measure of a bank's financial strength with regard to the second most reliable forms of capital, from a regulator's point of view. It consists of accumulated after-tax surplus of retained earnings, revaluation reserves of fixed assets and long-term holdings of equity securities, general loan-loss reserves , hybrid (debt/equity) capital instruments, and subordinated debt .
Tier 1 capital is the most reliable form of capital.
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