Tier 2 capital Definition
Tier 2 capital is a measure of a bank's financial strength with regard to the second most reliable forms of capital, from a regulator's point of view. It consists of accumulated after-tax surplus of retained earnings, revaluation reserves of fixed assets and long-term holdings of equity securities, general loan-loss reserves, hybrid (debt/equity) capital instruments, and subordinated debt.
Tier 1 capital is the most reliable form of capital.