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
Famous quotes containing the words general and/or provisions:
“When General Motors has to go to the bathroom ten times a day, the whole country’s ready to let go. You heard of that market crash in ‘29? I predicted that.... I was nursing a director of General Motors. Kidney ailment, they said; nerves, I said. Then I asked myself, “What’s General Motors got to be nervous about?” “Overproduction,” I says. “Collapse.””
—John Michael Hayes (b. 1919)
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—Charles Dickens (1812–1870)