A preference share/ preferred share (preferential share) that is issued by banks with no fixed maturity and that do not accumulate unpaid, skipped dividends from prior years. Preference shares are part of share capital but it is perceived as sort of debt as these carry fixed rate of dividend.
For banks, this category of shares cannot exceed a certain level (e.g., 40%) of a bank’s Tier 1 capital. Any amount issued over and beyond that level usually qualifies as Tier 2 capital.
It is known for short as PNCPS.
