The Central Bank of Nigeria (CBN) has pegged Tier-2 or supplementary capital for banks at 33.3 per cent of Tier-1 Capital.
The CBN in a circular to banks signed by the Director, Banking Supervision, Mrs. Tokunbo Martins, said, henceforth, total Tier Two capital, including Other Comprehensive Income (OCI) Reserves should be limited to 33.33 per cent of total Tier One capital.
Tier 2 capital is supplementary bank capital that includes such items as, revaluation reserves, undisclosed reserves, hybrid instruments and subordinated term debt.
A bank’s reserve requirements include its Tier 2 capital in its calculation, but it is considered less reliable than its Tier 1 capital.
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