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Capital and regulation

Tier 2 capital

A bank's supplementary capital, ranking below Tier 1, that absorbs losses if the bank fails rather than while it keeps trading.

Tier 2 is gone concern capital: it protects depositors and senior creditors if the bank is wound up, but it is lower quality than Tier 1, which absorbs losses while the bank keeps operating.

It typically includes certain subordinated debt and forms part of the total capital ratio alongside Tier 1.

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