Tier 1 capital is a measure of the strength of a banking institution in terms of its "capital adequacy," or its ability to meet claims on its assets in adverse market conditions. Tier 1 capital was first defined by the Basel Committee on Banking Supervision in the first Basel Accord of 1988 as a standardized means of assessing market risk across jurisdictions. Tier 1 capital includes:
Tier 1 Capital includes:
- Common stock, undivided profits, paid-in-surplus;
- Non-cumulative perpetual preferred stock;
- Minority interests in consolidated subsidiaries;
- All intangible assets (with limited exceptions);
- Identified losses;
- Deferred tax assets. 
Under Basel III, the third iteration of the accord, introduced in December 2010 and expected to be phased in beginning in January 2013, the tier 1 capital ratio would move from four percent of assets to six percent. 
- Instruments eligible for inclusion in Tier 1 capital. Bank for International Settlements.
- Key Financial Ratios. FDIC.
- Basel III Summary – Guide to the changes. Basel II Risk.