Tier 3 Capital

What is 'Tier 3 Capital'

Tier 3 capital is tertiary capital held by banks to meet part of their market risks, that includes a greater variety of debt than tier 1 and tier 2 capitals. Tier 3 capital debts may include a greater number of subordinated issues, undisclosed reserves and general loss reserves compared to tier 2 capital.

BREAKING DOWN 'Tier 3 Capital'

Tier 3 capital is used to support market risk, commodities risk and foreign currency risk. To qualify as tier 3 capital, assets must be limited to 250% of a banks tier 1 capital, be unsecured, subordinated and have a minimum maturity of two years.

RELATED TERMS
  1. Tier 2 Capital

    One of two categories by which a bank's capital is divided. Tier ...
  2. Real Estate Tier Classifications: ...

    Cities are categorized as Tier I, Tier II, or Tier III depending ...
  3. Advanced Company (TSX Venture)

    An issuer listed on Canada's TSX Venture exchange that has significant ...
  4. Tier 1 Leverage Ratio

    The relationship between a banking organization's core capital ...
  5. Tier 1 Capital

    A term used to describe the capital adequacy of a bank. Tier ...
  6. Tier 2 Spill

    The second of the three types of oil spills as categorized by ...
Related Articles
  1. Markets

    What's Tier 2 Capital?

    Tier 2 capital is a category of supplementary capital that banks hold.
  2. Markets

    Explaining Tier 1 Capital

    Tier 1 capital refers to the core capital a bank must maintain in relation to its assets.
  3. Markets

    Explaining the Tier 1 Leverage Ratio

    The Tier 1 leverage ratio measures a bank’s core capital against its total assets.
  4. Investing

    Understanding the Capital Adequacy Ratio

    The capital adequacy ratio (CAR) is an international standard that measures a bank’s risk of insolvency from excessive losses. Currently, the minimum acceptable ratio is 8%. Maintaining an acceptable ...
  5. Investing

    Calculating the Tier 1 Capital Ratio

    The Tier 1 capital ratio is a measure of a depository financial institution’s financial health and capital adequacy.
  6. Markets

    Calculating Tier 1 Common Capital Ratio

    The tier 1 common capital ratio compares a financial institution’s core equity capital to its risk-weighted assets.
  7. Managing Wealth

    Using Economic Capital To Determine Risk

    Discover how banks and financial institutions use economic capital to enhance risk management.
  8. Markets

    My Mini-IPO: The Reality of Equity Crowdfunding

    Regulation A+, part of Title IV of the JOBS Act, has made equity crowdfunding a reality in the U.S. What does that mean for investors and entrepreneurs?
  9. Markets

    Understand the SEC Rules on Equity Crowdfunding

    The SEC's adoption of equity crowdfunding rules, initiated under the JOBS Act, enables small investors to invest in companies that show early potential.
  10. Markets

    Why These Are 2015's 10-Best Financial Stocks

    If you're going to invest in the financial stocks, these names need to be on your radar.
RELATED FAQS
  1. What is the difference between tier 1 capital and tier 2 capital?

    Learn what tier 1 capital and tier 2 capital, the differences between them, and how to calcu, alate a bank's capital ratio. Read Answer >>
  2. How can I calculate the tier 1 capital ratio?

    Learn about the tier 1 capital ratio, what the ratio indicates about a firm's capital adequacy and how to calculate a firm's ... Read Answer >>
  3. How can I calculate the leverage ratio using tier 1 capital?

    Learn about the tier 1 leverage ratio, how to calculate the tier 1 capital ratio and what this leverage ratio indicates about ... Read Answer >>
  4. If my brother-in-law, who works at a pharmaceutical company, tells me about his research ...

    Discover what tier 1 capital measures about a bank. Tier 1 capital levels were mandated by Basel III following the financial ... Read Answer >>
  5. What are some of the well-known no-load funds?

    Find out more about the capital to risk-weighted assets ratio, what the ratio measures and the formula used to calculate ... Read Answer >>
  6. How do I calculate the capital to risk weight assets ratio for a bank in Excel?

    Learn more about the capital to risk-weighted assets ratio and how to calculate a bank's capital adequacy ratio using Microsoft ... Read Answer >>
Hot Definitions
  1. GBP

    The abbreviation for the British pound sterling, the official currency of the United Kingdom, the British Overseas Territories ...
  2. Diversification

    A risk management technique that mixes a wide variety of investments within a portfolio. The rationale behind this technique ...
  3. European Union - EU

    A group of European countries that participates in the world economy as one economic unit and operates under one official ...
  4. Sell-Off

    The rapid selling of securities, such as stocks, bonds and commodities. The increase in supply leads to a decline in the ...
  5. Brazil, Russia, India And China - BRIC

    An acronym for the economies of Brazil, Russia, India and China combined. It has been speculated that by 2050 these four ...
  6. Brexit

    The Brexit, an abbreviation of "British exit" that mirrors the term Grexit, refers to the possibility of Britain's withdrawal ...
Trading Center