Banking
Subordinated Debt Issued (Tier 2 Capital)
The bank issues subordinated bonds to institutional investors to strengthen Tier 2 capital.
| Account Name | Type | Debit ($) | Credit ($) |
|---|---|---|---|
| Cash in Bank | Asset (+) | 20,000,000.00 | - |
| Subordinated Debt (Tier 2 Capital) | Liability (+) | - | 20,000,000.00 |
💡 Accountant's Note
Subordinated debt qualifies as Tier 2 capital under Basel III. It ranks below depositors in a liquidation scenario, justifying a higher interest rate. It must have at least 5 years remaining maturity to count toward capital.
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