<Li> Tier I Capital: Actual contributed equity plus retained earnings . </Li> <Li> Tier II Capital: Preferred shares plus 50% of subordinated debt . </Li> <P> Different minimum CARs are applied . For example, the minimum Tier I equity allowed by statute for risk - weighted assets may be 6%, while the minimum CAR when including Tier II capital may be 8% . </P> <P> There is usually a maximum of Tier II capital that may be "counted" towards CAR, which varies by jurisdiction . </P>

The weighting factor for government bonds in basel iii