A capital measure that is made up of common equity tier-1 capital (CET-1) and additional tier-1 capital (AT1):

Total tier 1 capital = common equity tier 1 capital + additional tier 1 capital

Total tier-1 capital is a layer of capital (for a bank or financial institution) that consists of common equity, minority interests, eligible noncumulative preferred stock, and the fixed rate cumulative preferred stock sold to the treasury, less goodwill and other necessary adjustments.

Tier-1 capital measures a bank’s financial strength from a regulatory standpoint. It is primarily made up of its equity capital and disclosed reserves. It constitutes an entity’s called-up share capital and eligible reserves plus non-controlling equity interests, less intangible assets and other deductions (other regulatory deductions) relating to the excess of expected loss over regulatory impairment allowance and securitization positions as determined by a regulatory authority.

In other words, it is an entity’s ordinary or common shareholder’s capital, excluding all hybrids.

By composition, a total tier-1 capital consists of: paid-in capital, retained earnings, surplus reserve, general risk reserve, undistributed profits, accumulated other comprehensive income (AOCI), capital reserve as well as all relevant regulatory adjustments (e.g., prudential valuation adjustments, goodwill net of deferred tax liabilities, gains on sale related to asset securitization, direct or indirect holding in own ordinary shares, etc.)

Total tier-1 capital that not net of tax assets and other intangible assets is known as gross total tier-1- capital. After deduction of tax assets and other intangible assets, it turns into net total tier-1 capital.