General Provisions
A general provision is created against losses which have not yet been identified. They qualify for inclusion in Tier 2 capital as long as they are not created against a known deterioration in value. They are limited to
- 1.25% of RWA (Risk-weighted assets) for banks using the standardized approach
- 0.6% of credit risk-weighted assets for banks using the IRB approach
Read more about this topic: Tier 2 Capital
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