Common Equity Tier-1 Capital includes Common Equity & others. My question is that If Preference shares or any other Financial instrument satisfies the criteria of Equity (Financial Instrument), will that be counted in Common Equity Tier-1 capital or this should be construed as per the nomenclature only which means that ONLY COMMON STOCK will be considered as Common Tier-1 Equity Capital.
Share
It will not be counted in Common Equity Tier 1. It may qualify for other Tier 1. Relevant text from the core is reproduced below :
Common Equity Tier 1 Capital includes common stock, issuance surplus related
to common stock, retained earnings, accumulated other comprehensive income, and
certain adjustments including the deduction of intangible assets and deferred tax assets.
Other Tier 1 Capital includes other types of instruments issued by the bank that meet
certain criteria. The criteria require, for example, that the instruments be subordinate
to such obligations as deposits and other debt obligations, not have a fixed maturity,
and not have any type of payment of dividends or interest that is not totally at the
discretion of the bank. Tier 2 Capital includes instruments that are subordinate to
depositors and to general creditors of the bank, have an original minimum maturity
of five years, and meet certain other requirements
It will not be counted in Common Equity Tier 1. It may qualify for other Tier 1. Relevant text from the core is reproduced below :
Common Equity Tier 1 Capital includes common stock, issuance surplus related
to common stock, retained earnings, accumulated other comprehensive income, and
certain adjustments including the deduction of intangible assets and deferred tax assets.
Other Tier 1 Capital includes other types of instruments issued by the bank that meet
certain criteria. The criteria require, for example, that the instruments be subordinate
to such obligations as deposits and other debt obligations, not have a fixed maturity,
and not have any type of payment of dividends or interest that is not totally at the
discretion of the bank. Tier 2 Capital includes instruments that are subordinate to
depositors and to general creditors of the bank, have an original minimum maturity
of five years, and meet certain other requirements