• Tier 1 total capital covers liquid banking assets such as cash, shares, etc.

  • The CET1 ratio compares the bank’s capital with its assets.
  • Tier 1 additional capital consists of instruments other than ordinary shares.
  • In the event of a crisis, capital is taken primarily from Tier 1.
  • Many bank stress tests against banks use Tier 1 capital as a starting point to test a bank’s liquidity and ability to weather a difficult monetary event.