LeoGlossary: Tier 1 Capital

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Tier 1 Capital refers to the

held in a bank's reserves. It is used to fund the activities of the bank's clients.

This is used to measure a the

strength of a , along with Tier 2 capital.

Under Basel III, the ratio is 6% of

weighted .

Capital of this nature is:

• retained earnings
• common stock
• preferred

The idea is for the

to be able to withstand large losses that threaten the stability of the .

General:

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