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:
“We are all instruments endowed with feeling and memory. Our senses are so many strings that are struck by surrounding objects and that also frequently strike themselves.”
—Denis Diderot (1713–84)