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PLK

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PLK Newbie

PLK

Posted
Posted

Hello, I am new to this site and to forums in general. I called a Chase bank today and spoke with them about foreign currency. I was told that they do not deal in Iraqi dinar and it would be hard to find anyone who did. This is the second time I have been told this. The first time was at a tier 2 bank. Also that Vietnamese Dong was nearly worthless. 

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gregp Mentor

gregp

Posted
Posted (edited)
1 hour ago, DoD said:

PLK, could you explain what a tier 2 bank is please?

 

https://www.investopedia.com/terms/t/tier2capital.asp

Tier 2 Capital Definition 

 
REVIEWED BY JULIA KAGAN
 
 Updated Jul 1, 2019 

What Is Tier 2 Capital? 

Tier 2 capital is the secondary component of bank capital, in addition to Tier 1 capital, that makes up a bank's required reserves. Tier 2 capital is designated as supplementary capital and is composed of items such as revaluation reserves, undisclosed reserves, hybrid instruments, and subordinated term debt. In the calculation of a bank's reserve requirements,

 

Tier 2 capital is considered less secure than Tier 1 capital, and in the United States, the overall bank capital requirement is partially based on the weighted risk of a bank's assets.

 
 
 
 
 
 
 
 
 
 
 
 
 

Tier 2 Capital

 

How Tier 2 Capital Works 

Laws governing bank capital requirements stem from the international Basel Accords, a set of recommendations from the Basel Committee on Bank Supervision. Under the Basel Accords, a bank's capital is divided into Tier 1 core capital and Tier 2 supplementary capital. The minimum capital ratio reserve requirement for a bank is set at 8%; 6% must be provided by Tier 1 capital. A bank's capital ratio is calculated by dividing its capital by its total risk-based assets.

Tier 2 capital is considered less reliable than Tier 1 capital because it is more difficult to accurately calculate and is composed of assets that are more difficult to liquidate. It is commonly split into two levels: upper and lower. Upper-level Tier 2 capital has the characteristics of being perpetual, and senior to preferred capital and equity. It also has cumulative, deferrable coupons and interest and principal that can be written down. Lower-level Tier 2 capital is characterized by being inexpensive for a bank to issue, having coupons that are not deferrable without triggering a default, and includes subordinated debt with a minimum five-year maturity.

 

KEY TAKEAWAYS 

  • Tier 2 capital is the secondary layer of a bank's capital held as required reserves.
  • Tier 2 capital is subordinate to Tier 1 capital and is considered riskier as it is more difficult to calculate if liquidation is required.
  • Tier 2 capital is comprised of revaluation reserves, general provisions, subordinated term debt, and hybrid capital instruments.

The Components of Tier 2 Capital 

The first component of Tier 2 capital is revaluation reserves, which are reserves created by the revaluation of an asset. A typical revaluation reserve is a building owned by a bank. Over time, the value of the real estate asset tends to increase and can thus be revalued.

The second component is general provisions. These are losses a bank may have of an as yet undetermined amount. The total general provision amount allowed is 1.25% of the bank's risk-weighted assets (RWA).

 
 

Most countries, including the United States, do not allow undisclosed reserves, which are profits not stated in a bank's reserve, to be used to meet reserve requirements.

The third element is hybrid capital instruments, which have mixed characteristics of both debt and equity instruments. Preferred stock is an example of hybrid instruments. A bank may include hybrid instruments in its Tier 2 capital as long as the assets are sufficiently similar to equity so losses can be taken on the face value of the instrument without triggering the liquidation of the bank.

 

The final component of Tier 2 capital under U.S. regulations is subordinated term debt with a minimum original term of five years or more. The debt is subordinated in regard to ordinary bank depositors and other loans and securities that constitute higher-ranking senior debt.

 
 
 
 
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Related Terms

What You Should Know About Bank Capital
Bank capital is the difference between a bank's assets and its liabilities, and it represents the net worth of the bank or its equity value to investors. 
more
Understanding Tier 1 Capital
Tier 1 capital is used to describe the capital adequacy of a bank and refers to core capital that includes equity capital and disclosed reserves. Equity capital is inclusive of instruments that cannot be redeemed at the option of the holder. 
more
Basel II
Basel II is a set of banking regulations put forth by the Basel Committee on Bank Supervision, which regulates finance and banking internationally. 
more
Common Equity Tier 1 (CET1): An Overview
Common Equity Tier 1 (CET1) is a component of Tier 1 capital that consists mostly of common stock held by a bank or other financial institution. 
more
Learn about Basel III
Basel III is a comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. 
more
What Is Tier 3 Capital?
Tier 3 capital is tertiary capital, which many banks hold to support their market risk, commodities risk, and foreign currency risk. 
more
 
Edited by gregp
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gregp Mentor

gregp

Posted
Posted
12 minutes ago, gregp said:

 

https://www.investopedia.com/terms/t/tier2capital.asp

Tier 2 Capital Definition 

 
REVIEWED BY JULIA KAGAN
 
 Updated Jul 1, 2019 

What Is Tier 2 Capital? 

Tier 2 capital is the secondary component of bank capital, in addition to Tier 1 capital, that makes up a bank's required reserves. Tier 2 capital is designated as supplementary capital and is composed of items such as revaluation reserves, undisclosed reserves, hybrid instruments, and subordinated term debt. In the calculation of a bank's reserve requirements,

 

Tier 2 capital is considered less secure than Tier 1 capital, and in the United States, the overall bank capital requirement is partially based on the weighted risk of a bank's assets.

 
 
 
 
 
 
 
 
 
 
 
 
 
 

Tier 2 Capital

 

How Tier 2 Capital Works 

Laws governing bank capital requirements stem from the international Basel Accords, a set of recommendations from the Basel Committee on Bank Supervision. Under the Basel Accords, a bank's capital is divided into Tier 1 core capital and Tier 2 supplementary capital. The minimum capital ratio reserve requirement for a bank is set at 8%; 6% must be provided by Tier 1 capital. A bank's capital ratio is calculated by dividing its capital by its total risk-based assets.

Tier 2 capital is considered less reliable than Tier 1 capital because it is more difficult to accurately calculate and is composed of assets that are more difficult to liquidate. It is commonly split into two levels: upper and lower. Upper-level Tier 2 capital has the characteristics of being perpetual, and senior to preferred capital and equity. It also has cumulative, deferrable coupons and interest and principal that can be written down. Lower-level Tier 2 capital is characterized by being inexpensive for a bank to issue, having coupons that are not deferrable without triggering a default, and includes subordinated debt with a minimum five-year maturity.

 

KEY TAKEAWAYS 

  • Tier 2 capital is the secondary layer of a bank's capital held as required reserves.
  • Tier 2 capital is subordinate to Tier 1 capital and is considered riskier as it is more difficult to calculate if liquidation is required.
  • Tier 2 capital is comprised of revaluation reserves, general provisions, subordinated term debt, and hybrid capital instruments.

The Components of Tier 2 Capital 

The first component of Tier 2 capital is revaluation reserves, which are reserves created by the revaluation of an asset. A typical revaluation reserve is a building owned by a bank. Over time, the value of the real estate asset tends to increase and can thus be revalued.

The second component is general provisions. These are losses a bank may have of an as yet undetermined amount. The total general provision amount allowed is 1.25% of the bank's risk-weighted assets (RWA).

 
 

Most countries, including the United States, do not allow undisclosed reserves, which are profits not stated in a bank's reserve, to be used to meet reserve requirements.

The third element is hybrid capital instruments, which have mixed characteristics of both debt and equity instruments. Preferred stock is an example of hybrid instruments. A bank may include hybrid instruments in its Tier 2 capital as long as the assets are sufficiently similar to equity so losses can be taken on the face value of the instrument without triggering the liquidation of the bank.

 

The final component of Tier 2 capital under U.S. regulations is subordinated term debt with a minimum original term of five years or more. The debt is subordinated in regard to ordinary bank depositors and other loans and securities that constitute higher-ranking senior debt.

 
 
 
 
SPONSORED

Maximize Your Savings (And Your Retirement Outlook)

The right financial advisor can help you reach your long-term financial goals. SmartAsset’s free tool matches you with fiduciary financial advisors in your area in 5 minutes. Each advisor has been vetted by SmartAsset and is legally bound to act in your best interests. If you’re ready to be matched with local advisors that will help you achieve your financial goals, get started now.
 
 
Open a New Bank Account
Advertiser Disclosure

Related Terms

What You Should Know About Bank Capital
Bank capital is the difference between a bank's assets and its liabilities, and it represents the net worth of the bank or its equity value to investors. 
more
Understanding Tier 1 Capital
Tier 1 capital is used to describe the capital adequacy of a bank and refers to core capital that includes equity capital and disclosed reserves. Equity capital is inclusive of instruments that cannot be redeemed at the option of the holder. 
more
Basel II
Basel II is a set of banking regulations put forth by the Basel Committee on Bank Supervision, which regulates finance and banking internationally. 
more
Common Equity Tier 1 (CET1): An Overview
Common Equity Tier 1 (CET1) is a component of Tier 1 capital that consists mostly of common stock held by a bank or other financial institution. 
more
Learn about Basel III
Basel III is a comprehensive set of reform measures designed to improve the regulation, supervision and risk management within the banking sector. 
more
What Is Tier 3 Capital?
Tier 3 capital is tertiary capital, which many banks hold to support system" rel="">support their market risk, commodities risk, and foreign currency risk. 
more
 

 

Not sure if this has anything to to with Tier 2 Banking, but sounds interesting. 

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umbertino Grand Master

umbertino

Posted
Posted

Quote

Hello, I am new to this site and to forums in general. I called a Chase bank today and spoke with them about foreign currency. I was told that they do not deal in Iraqi dinar and it would be hard to find anyone who did. This is the second time I have been told this. The first time was at a tier 2 bank. Also that Vietnamese Dong was nearly worthless. 

End Quote

 

Hello PLK....Welcome to DV....You're new ( which is not a guilt in itself)......

 

Friendly hint....You are not supposed to write those things ( at least not now when you are still a rookie here) in order not to create some  hostile reactions right from the start

 

 

Best to you

 

 

 

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DoD Proficient

DoD

Posted
Posted
32 minutes ago, gregp said:

A Tier 2 Bank would be required to have over 50-Million in assets. 

Thanks gregp I guess my account at Chase is safe. I had just not ever considered asking a bank what tier they were before I started banking with them...lol 

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King Bean Newbie

King Bean

Posted
Posted (edited)

Tier 2 ??  Woop woop.  According to RayHen, TNT Tony, Judy Lyington and MarkZzzzzzz…...all those in Tier2a, Level 12, Sub-level x8, Team Zulu, Squad Condor, Class Java will be getting top secret #800 numbers at a time 'set in concrete, but that could be at any time in the future'.

                                                                                            So I'm all set.

 

                                       Image result for so youre saying theres a chance gif
 
 
                                                           And Welcome PLK. :twothumbs:
Edited by King Bean
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gregp Mentor

gregp

Posted
Posted
On 8/21/2019 at 10:48 PM, Freedomwish said:

I hope the new guy/girl enjoys whiskey as much as I do, it'll come in handy soon being here you'll see LOL  :drunk:

 

tenor.gif?itemid=11208706

 

Here’s to another 10! 

What the-hell-else is there to read at 2:53AM. (and 6,7,8,9,10, etc).  😂

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