Tier 1 Capital
Also called: CET1, common equity tier 1, core capital
Tier 1 capital is a bank's highest-quality loss-absorbing capital, dominated by common equity and retained earnings. Common Equity Tier 1 is the strictest measure and the one markets watch. The critical property is that it absorbs losses while the bank is still operating, unlike debt-like instruments that only help once it has failed — the distinction 2008 made painfully clear.