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A contingent convertible bond (CoCo), also known as an enhanced capital note (ECN), [1] is a fixed-income instrument that is convertible into equity if a pre-specified trigger event occurs. [2] The concept of CoCo has been particularly discussed in the context of crisis management in the banking industry. [ 3 ]
Tier 2 capital, or supplementary capital, includes a number of important and legitimate constituents of a bank's capital requirement. [ 1 ] [ note 1 ] These forms of banking capital were largely standardized in the Basel I accord, issued by the Basel Committee on Banking Supervision and left untouched by the Basel II accord.
Basel III requires banks to have a minimum CET1 ratio (Common Tier 1 capital divided by risk-weighted assets (RWAs)) at all times of: . 4.5%; Plus: A mandatory "capital conservation buffer" or "stress capital buffer requirement", equivalent to at least 2.5% of risk-weighted assets, but could be higher based on results from stress tests, as determined by national regulators.
Tier 1 capital is the core measure of a bank's financial strength from a regulator's point of view. [note 1] It is composed of core capital, [1] which consists primarily of common stock and disclosed reserves (or retained earnings), [2] but may also include non-redeemable non-cumulative preferred stock.
Bond funds offer diversification, as they invest in multiple bonds, reducing the risk associated with any single bond defaulting. Bond funds also offer a wide range of options for investors.
Capital adequacy ratio is the ratio which determines the bank's capacity to meet the time liabilities and other risks such as credit risk, operational risk etc. In the most simple formulation, a bank's capital is the "cushion" for potential losses, and protects the bank's depositors and other lenders.
In India, the Tier 1 capital is defined as "'Tier I Capital' means "owned fund" as reduced by investment in shares of other non-banking financial companies and in shares, debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group exceeding ...
AT1 may refer to: Angiotensin II receptor type 1; Additional Tier 1 capital, see Contingent convertible bond; Yamaha AT1 (1969-1971) motorcycle; Ekspress AT1, communications satellite AT1 in the Ekspress network; AeroTech Release 1; tabletop wargame