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 ?
M2 EQUITYBITES-March 31, 2017-Jyske Bank issues EUR300m supplementary Tier 2 capital
NORDIC BUSINESS REPORT-March 31, 2017-Jyske Bank issues EUR300m supplementary Tier 2 capital
In a statement, the central bank said, 'Revaluation reserves arising from change in the carrying amount of a bank's property consequent upon its revaluation would be considered as common equity tier 1 capital (CET1) instead of Tier 2 capital as hitherto.
The issuance proceeds will be used to boost NBK's Tier 2 capital, as it has been approved as fully eligible Tier 2 Capital by the Central Bank of Kuwait (CBK) under its Basel III framework, and for general and corporate purposes.
Thereafter, we will do tier 2 capital of another $200m.
The total capital of the company including Tier 1 and Tier 2 capital will increase to Rs.
875% 10-year non-call five issue that qualifies as Tier 2 capital under Basel III.
The approval of the pre-termination of the subordinated debt, qualifying as Tier 2 capital, came amid preparations for Basel III, which will take effect on Jan.
Another EUR450m was secured through transforming upper Tier 2 capital into core Tier 1 capital, while EUR170m was generated through releasing unrevealed reserves and including fourth-quarter results.
Combined with Tier 2 capital - which includes undisclosed reserves, general provisions and loan loss reserves, a bank statement said that overall capital adequacy will exceed 17 per cent.
72 billion of the deposits it received into Tier 2 capital.
Tier 2 capital is defined as (i) reserves for problem assets [bad debts] that may not exceed 100% of Tier 1 capital; (ii) perpetual preferred stock not qualified to include into Tier 1; (iii) hybrid capital instruments and mandatory convertibles; (iv) subordinated debt; and (v) preferred stock with medium-term remaining current maturity.