Capital Requirements

Capital Requirements:

  1. The capital base of the bank consists of the following 3 types of capital requirements: Tier 1, Tier 2 and Tier 3.
  2. The total of Tier 2 (supplementary) elements will be limited to a maximum of 100% of the total of Tier 1 capital.
  3. Subordinated term debt will be limited to a maximum of 50% of Tier 1 capital.
  4. Tier 3 capital will be limited to 250% of a banku2019s Tier 1 capital that is required to support market risk.
  5. Shareholderu2019s equity and retained earning consists of Tier 1 capital while supplementary refers to Tier 2 capital.
  6. The sum of total of Tier 2 and Tier 3 capital should not exceed the total of Tier 1 capital.

Accounting & Finance for Banking

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