Hybrid Instruments
Hybrids are instruments that have some characteristics of both debt and equity. Provided these are close to equity in nature, in that they are able to take losses on the face value without triggering a liquidation of the bank, they may be counted as capital. Perpetual preferred stocks carrying a cumulative fixed charge are hybrid instruments. Cumulative perpetual preferred stocks are excluded from Tier 1.
Read more about this topic: Tier 2 Capital
Famous quotes containing the word instruments:
“But when to mischiefmortals bend their will,
How soon they find fit instruments of ill!”
—Alexander Pope (1688–1744)