Tier 1 Capital

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DEFINITION of 'Tier 1 Capital'

A term used to describe the capital adequacy of a bank. Tier I capital is core capital, this includes equity capital and disclosed reserves.

INVESTOPEDIA EXPLAINS 'Tier 1 Capital'

Equity capital includes instruments that can't be redeemed at the option of the holder.

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RELATED FAQS
  1. If my brother-in-law, who works at a pharmaceutical company, tells me about his research ...

    Tier 1 capital measures a bank's financial strength. It is composed of the company's common stock and retained earnings. ... Read Full Answer >>
  2. What are some of the well-known no-load funds?

    The capital adequacy ratio promotes stability and efficiency of worldwide financial systems and banks. The capital to risk-weighted ... Read Full Answer >>
  3. What is the difference between tier 1 capital and tier 2 capital?

    Under the Basel Accord, a bank's capital consists of tier 1 capital and tier 2 capital, and the two types of capital are ... Read Full Answer >>
  4. How can I calculate the leverage ratio using tier 1 capital?

    The tier 1 leverage ratio is used to determine the capital adequacy of a bank or a holding company, and it places constraints ... Read Full Answer >>
  5. Why is the capital adequacy ratio important to shareholders?

    The capital adequacy ratio (CAR) measures the amount of capital a bank retains compared to its risk. National regulators ... Read Full Answer >>
  6. What are the Basel III rules, and how does it impact my bank investments?

    The Basel III rules are a regulatory framework designed to strengthen financial institutions by placing guidelines pertaining ... Read Full Answer >>
  7. I know there is a form of deposit insurance where a portion of my bank account deposits ...

    First things first, it's only partially correct to think that a portion of your bank deposits is protected. The Federal Deposit ... Read Full Answer >>
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