understanding financial jargon
Tier One Capital
Firms such as banks working in the financial sector have capital requirements imposed upon them by the Regulator, to ensure they remain solvent. A company such as a bank will have capital it can call it's own, for example the valuation of the company (the share price x total number of shares in issue), profits made in the year, and so on. This is the high quality 'safe' capital and is called tier one capital. The bank may also have other capital (risk weighted assets) on it's balance sheets such as loans made to other businesses and individuals. This is a lower level of quality since there is a risk of default, where the bank could lose some of that capital. This type of capital is not included in tier one.
What to do if you need more help
If you need more help with your specific commercial loan, mortgage or insurance requirement please speak to a professional financial adviser.
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