TIER-1 CAPITAL

Banks' regulatory capital is divided into Tier 1 and Tier 2, while Tier 1 is
subdivided into Common Equity Tier 1 and additional Tier 1 capital.

Common Equity Tier 1 capital includes equity instruments (retained

earnings + common stock) (can also include preferred stocks) that have
discretionary dividends and no maturity, while additional Tier 1 capital
comprises securities that are subordinated to most subordinated debt, have
no maturity, and their dividends can be cancelled at any time.

TIER-2 CAPITAL
Tier 2 capital consists of unsecured subordinated debt with an original
maturity of at least five years. Tier 2 capital includes hybrid capital
instruments, loan-loss and revaluation reserves as well undisclosed
reserves.

Hybrid securities, often referred to as "hybrids," generally combine both

debt and equity characteristics. The most common type of hybrid security
is a convertible bond that has features of an ordinary bond but is heavily
influenced by the price movements of the stock into which it is
convertible.

The unpublished or hidden reserves of a financial institution that may not

appear on publicly available documents such as a balance sheet, but are
nonetheless real assets, which are accepted as such by most banking
institutions.

Tier 3 capital is used to support market risk, commodities risk and foreign
currency risk

CAPITAL ADEQUACY RATIO