Tier 2 Capital

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Tier 2 Capital

Capital in a bank that is difficult to calculate or liquidate, especially as compared to Tier 1 capital. Under the Basel I Accord, tier 2 capital includes revaluation reserves (or the increase in the value in an asset after it is reappraised), general provisions (or money that the bank has lost but has been unable to calculate), and subordinated debt (or debt that, in the event of default, receives payment only after some other debt). Tier 2 capital is included in calculations of a bank's reserve requirements but is not considered as reliable as Tier 1 capital.
References in periodicals archive ?
Mr Adeola, who said that the Tier Two capital would be raised in the first quarter of 2015, explained that the bank would continue to drive growth strategies domestically, focusing on building long-term relationships and creating sustainable value for customers.
Capital requirement The loan will support the bank's tier two capital requirement and is subject to legal and regulatory approvals, the banks said in a disclosure statement posted on MSM website.
But most banks now set internal targets slightly north of 15% - thus 15%, 16%, 17% - so whenever their capital gets close to that level it is a trigger to raise tier one or tier two capital.
It is understood the Abu Dhabi government wants to continue to be invested in Malaysia,' an unnamed source reportedly said, adding: 'However, there has been a change in strategy in ADCB to be more UAE-focused and the sale would free up about four percentage points of tier one and tier two capital.
Sri Lankan banks based on the tier one capital can successfully engage the Qatari banks to attract tier two capital," the central bank governor said.
The measure of solvency for a bank is done by the ratio of tier one and tier two capital.
He also represents clients in debt capital markets transactions, which in recent years have included tier two capital notes for bank issuers, extendible liquidity notes, commercial paper, and medium-term notes.
It was designed in the wake of the global financial crisis to invest in Tier One and Tier Two capital in emerging market commercial banks that are systemically important for their local economies.
NBG will fully exercise its rights, using the proceeds from Finansbank's maturing Tier two capital [subordinated debt] that it currently holds to fund the rights issue and turn it into core Tier one,' NBG chief financial officer Anthimos Thomopoulos said.
Junior subordinated debt securities increased $8,248,000 due to the net addition in September 2005 of $8,000,000 of trust preferred borrowing, of which $7,000,000 was transferred to the Bank as tier one capital, and is considered tier one and tier two capital on a consolidated basis.
Negotiations are going on among the Nations Trust Bank (NTB) and the foreign parties, in a bid to raise funds for their tier two capital, which is capital that can absorb losses in the event of a bank winding-up.
8 percent at end-2007, was modest by regional standards, but reflects the bank's view of maintaining an optimal mix of Tier One and Tier Two capital.