Secondary capital includes secondary capital instruments and their premiums, excess loan loss reserve and minority shareholders' capital. In banking practice, tier 2 capital instruments mainly include qualified subordinated debt, convertible bonds and qualified excess loan loss reserve.
Tier 1 capital, also known as Tier 2 capital and supplementary capital, is the division of different components of bank capital according to their nature and functions. It is the secondary capital of a bank, an important part of its assets, and an indicator to measure its capital adequacy ratio. The goal of secondary capital is to absorb losses in the case of bankruptcy liquidation, and its ability to bear risks and absorb losses is relatively poor.
Secondary capital is also called "secondary capital". According to the nature and function of bank capital, the division of different components of bank capital is the secondary capital of banks and an important part of bank assets. 198 1 was originally managed by three federal agencies in the United States.
Standard: Tier 2 capital consists of the property rights of some non-permanent shareholders, such as preferred stock with maturity date, subordinated debt and long-term debt of banks. Its purpose is to make the bank bear a certain loss of bad debts and maintain the steady operation and normal profit of the bank.
Tier 2 capital ratio
As the secondary capital of banks, secondary capital can also absorb losses and resist risks to a certain extent. According to the Basel agreement, the proportion of secondary capital in bank capital can reach 50%; The Measures for the Administration of Capital Adequacy Ratio of Commercial Banks stipulates that the secondary capital of commercial banks shall not exceed 100% of the core capital.
Over the years, the proportion of secondary capital in the total capital of commercial banks in China is extremely low, and the proportion of core capital in the capital structure is relatively large, even exceeding 90% in state-owned commercial banks and generally around 70% in listed banks. The proportion of secondary capital in commercial banks' capital is far from the regulatory upper limit of 50%, and commercial banks still have a lot of room to increase secondary capital.