Tier 2 capital is supplementary capital that ... Bank for International Settlements. "Definition of Capital in Basel III - Executive Summary." ...

To calculate a bank's tier 1 capital ratio ... 4.5% of that must be common equity tier 1 capital (CET1). Tier 2 capital is composed of any supplementary capital the bank has, such as loan-loss ...

You can calculate a bank's capital to risk-weighted assets ratio in Microsoft Excel once you determine its tier 1 and tier 2 capital and its risk-weighted assets. First, let's define our variables.