Regulatory Glossary

This glossary contains terms and abbreviations in the field of regulatory reporting. It should help you to get a quick and general overview of the respective terms.

Tier-1-Capital

Tier-1-Capital is the so-called "Going-concern" capital, which is in principle just the equity capital. It is divided into two categories:

  1. Common equity: Directly given by the institution (ordinary shares), retained earnings, special items for general banking risks, etc.
  2. Additional (hybrid) equity: Preference shares, silent participations, equity instruments from consolidated subsidiaries, hybrid capital instruments (capital instruments, which can neither be clearly classified as equity nor as borrowed capital; e.g. bonds, which are combined with an insurance contract).

Tier-2-Capital

Tier-2-Capital is the so-called "Gone-Concern" capital, also called additional capital. It is divided into four categories:

  1. Long-term subordinated liabilities
  2. Cumulative preferred shares (Preferred shares, for which minimum dividends must be paid out in years when a profit is made)
  3. General credit risk adaption
  4. Open general value adjustment / valuation adjustment excess

TLAC Total Loss-Absorbing Capacity

The Total Loss-Absorbing Capacity (TLAC) is a recommendation of the Financial Stability Board (FSB) as of November 2014. From 2016 onwards, the 30 biggest banks worldwide should keep their bank's loss absorbing capacity, comprising 16% to 20% of the risk weighted assets and 6% of the unweighted assets. The Total Loss-Absorbing Capacity (TLAC) consists of equity and elements, which can be converted into equity. The Minimum Requirement for Eligible Liabilities (MREL) could be interesting in regards to a bank's loss-absorbing capacity.

Link to the FSB's website

TLTRO Targeted Longer-Term Refinancing Operations

Targeted Longer-Term Refinancing Operations (TLTRO) should improve the credit granting of banks to the non-financial area. The total volume of funds made available from the European Central Bank (ECB) to the banks for TLTRO lending is dependent on the total outstanding exposures of banks to the nonfinancial sector.

Link to the Bundesbank's website

TR Transaction Register

All derivative transactions need to be reported to the Transaction Register (TR). This is a regulation of the European Market Infrastructure Regulation (EMIR) and should improve the market transparency in the field of derivative transactions.

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