Charta

Tier 1 capital

Capital that can absorb losses while the bank continues to operate, made up of common equity tier 1 and additional tier 1 instruments.

Where you will meet it

Tier 1 capital comes up in 2 learning outcome notes across the FRM syllabus. A few of them:

Regulating the Crypto Ecosystem: The Case of Unbacked Crypto Assets
FRM Part II · Current issues in financial markets
“Group 2 exposures should stay within 2 percent of Tier 1 capital and generally below 1 percent.”
Solvency, Liquidity, and Other Regulation After the Global Financial Crisis
FRM Part II · Operational risk and resilience
“As a formula, the leverage ratio is Leverage = Tier 1 capital ÷ total exposure.”

See also

Common equity tier 1

All terms beginning with T · FRM glossary

Practise tier 1 capital until it is automatic: questions that explain every wrong option.

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