Hello,
In the notes it makes a distinction between "disclosed reserves" as being tier 1 capital and "general loan loss provisions" and "asset valaution reserves" as Tier 2.
I know this might be splitting hairs, but what is the difference between a "disclosed reserve" and the other two types of reserves?
Also, is the total amount of tier 3 capital allowed based off of the total amount of tier 1 capital allocated to all 3 buckets or just the market bucket? Say we set aside 10MM for op risk and 10MM for credit, does this mean that we can use up to 50MM for market risk or do we have to allocate some tier 1 to market before we can use any tier 3?
Thanks!
Shannon
In the notes it makes a distinction between "disclosed reserves" as being tier 1 capital and "general loan loss provisions" and "asset valaution reserves" as Tier 2.
I know this might be splitting hairs, but what is the difference between a "disclosed reserve" and the other two types of reserves?
Also, is the total amount of tier 3 capital allowed based off of the total amount of tier 1 capital allocated to all 3 buckets or just the market bucket? Say we set aside 10MM for op risk and 10MM for credit, does this mean that we can use up to 50MM for market risk or do we have to allocate some tier 1 to market before we can use any tier 3?
Thanks!
Shannon
