What is the capital of level 2?

level 2 capital is a term used to describe specific types of capital held by a bank to meet the requirements for capitalization. Is less safe than level 1 capital. Different countries have different laws on capitalization in banks, but generally have a capital value to finally have 8% of the declared assets. If the Bank does not meet these requirements, they must take steps to meet or risk closure and adopted by receipt because depositors and investors with the bank are at risk when the bank is not capitalized. In general, it includes unpublished reserves, convertible securities, subordinate debt and general provisions, capital held at hand to cover the expected or future losses. Technically general provisions may not be capital because they are probably already charged, but since banks can keep funds for losses in the future, this may be claimed by the general provisions in the form of capital level 2 until they are used.

Capital requirements are set out in the law and banks can be audited to see if they coincide with the requirements. Evidence of assets at hand, as well as the assets that banking checks must be provided on request of regulatory bodies. If banks do not have sufficient capital, they must be able to explain why. Banks in the process of solving capital deficiencies will be monitored until the problem is resolved, while banks without a clear plan to handle insufficient capitalization can take over regulatory agencies.

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Tier 1 capital consists of a more stable and reliable form of capital and is a higher evaluation of two forms of capital that the bank can have at hand. Banks usually have a combination of capital Tier 1 and Tier 2 and should be able to document capital at hand and how it was used. Investors and deposits on banks to meet capital requirements. If there is a banking run or similar disaster, the bank must have access to capitalU to solve the problem and keep the bank above the water until the conditions are stabilized.

In cases where banks fail, their level 1 and level 2 reserves are exhausted and deposits, creditors and investors can claim to get their losses against the bank. Things such as deposits are designed to minimize the risk for people with the funds for deposit in the bank.