Core capital is composed of disclosed reserves and common stock. It can also include non-cumulative, non-redeemable preferred stock.
As well as Core Capital, banks also use instruments to accumulate Tier 1 capital, such as preference shares and CoCos. However, such instruments must adhere to strict conditions. Capital acquired through these instruments can only account for 15% of the bank’s total Tier 1 capital. See also Additional Tier 1 or AT1
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