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Part I The Elements of Bank Financial Supervision, 6 The Bank Capital Calculation—Basel III

From: International Regulation of Banking: Capital and Risk Requirements (2nd Edition)

Simon Gleeson

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From: Oxford Legal Research Library (http://olrl.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved.date: 27 October 2020

Regulation of banks — Basel 3 — Tier 1 capital — Tier 2 capital
6.01 The Basel III definition of capital is much simplified. Tier 1 may consist of common equity tier 1 and some non-equity (‘additional tier 1’). Tier 2 capital is a single class of deferred debt, and tier 3 is abolished. 6.02 Common equity tier 1 capital means: 6.03 One of the major policy choices made by Basel was to create strong incentives for banks to raise capital in the form of homogenized shares. The rules disallow shares which differ in any way from others from counting as tier 1, to the extent that it is only begrudgingly accepted that non-voting...
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