Tier 2 capital is debt that is subordinated to the majority of other calls on the bank. It is divided into Upper Tier 2 and Lower Tier 2. Upper Tier 2 debt is undated. It must be of a type unlikely to threaten the solvency of the bank. Lower Tier 2 capital is dated normally with a maturity date of more than 5 years.
Lower Tier 2 capital cannot exceed 50% of Tier 1.
Tier 2 capital as a whole cannot exceed Tier 1 capital.