Tier II (supplementary)capital includes which of the following?
I. Allowance for loan and lease losses,up to 1.25 percent of risk-weighted assets
II. Subordinated debt not maturing within five years (max amount = 50 percent of Tier 1 capital)
III. Common stock and retained earnings
IV. Nontransaction deposits

Question

Quizplus · Accepted Answer

Tier II capital includes subordinated debt not maturing within five years (up to 50% of Tier 1 capital) and an allowance for loan and lease losses (up to 1.25% of risk-weighted assets). Common stock and retained earnings are part of Tier 1 capital, while nontransaction deposits are not included in either Tier 1 or Tier 2 capital. Therefore, options (A), (B), (D), and (E) are incorrect.

Tier II (Supplementary)capital Includes Which of the Following