African Financial Markets: Provider of African Business and Economy information and research

Click here for share price, fundamental analysis, financial statement, news, graphs, corporate action on any company.

Click here for stock market indices, news, market profile, economic statistics, exchange rate on any country.

Click here for Ranking and Analysis of equities on a Pan-African basis. Pan-African Equity Indices Stock Selection Tool

Click here for currency exchange rates.

Click here for details of collective investment fund open to retail and institutional investors.

Tier Two Ratio

Tier Two Capital is a measure of the capital adequacy of a bank and represents the proportion of a bank's Risk weighted Assets that is covered by its Tier 2 capital.

Tier 2 capital is the secondary capital of a bank and represents capital which can absorb losses in the event of a winding-up and so provides a lesser degree of protection to depositors. It consists of accumulated retained profits, revaluation reserves, long-term holdings of equity securities, general loan-loss reserves, hybrid (debt/equity) capital instruments, subordinated debt etc.

Risk weighted assets is the total of all assets held by the bank which are weighted for credit risk according to a formula determined by the Regulator (usually the country's Central Bank). Most Central Banks follow the BIS - Bank of International Settlements - guidlelines in setting asset risk weights. Assets like cash and coins usually have zero risk weights, while unsecured loans might have a risk weight of 100%.

It is calculated as:-

Tier Two Capital / Risk Weighted Assets

	<-Back

	v advertisement v

Glossary Definition