Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. It consists of the types of capital considered the most reliable and liquid, primarily equity. Examples of Tier 1 capital are common stock, preferred stock that is irredeemable and non-cumulative, and retained earnings. The essential function of a bank is to provide services related to the storing of deposits and the extending of credit. ... In politics a capital (also called capital city or political capital — although the latter phrase has an alternative meaning based on an alternative meaning of capital) is the principal city or town associated with its government. ... This article is about concept of equity in Anglo-American jurisprudence. ... Common stock, also referred to as common shares, are, as the name implies, the most usual and commonly held form of stock in a corporation. ... A preferred stock, also known as a preferred share or simply a preferred, is a share of stock carrying additional rights above and beyond those conferred by common stock. ...

The theoretical reason for holding capital is that it should provide protection against unexpected losses. Note that this is not the same as expected losses-- provisions and reserves are for expected losses.

See also

• Tier 2 capital
• Capital requirements
• Basel Accord
• Basel Capital Accords
• Basel I
• Basel II

Tier 2 capital is a measure of a banks financial strength with regard to the second most reliable forms of capital, from a regulators point of view. ... Banks and depository institutions are regulated by governments to disclose and handle their capital in a certain way. ... The Basel Accord(s) refers to the banking supervision Accords (recommendations to laws), Basel I and Basel II issued by the Basel Committee on Banking Supervision. ... The Basel Capital Accords are a series of discussion papers issued by the Basel Committee on Banking Supervision. ... Basel I is the term which refers to a round of deliberations by central bankers from around the world, and in 1988, the Basel Committee (BCBS) in Basel, Switzerland, published a set of minimal capital requirements for banks. ... From Wikipedia, the free encyclopedia. ...

External link

• 10 largest banking groups by tier 1 capital at the end of 2004 - from The Economist.