On Tier 1 and Tier 2 capital, would these be equity and liability accounts for a bank?
For example, Tier 2 capital (sub instruments with original maturity >5 years) would be sub debt issued by the bank, and therefore is a liability on the bank’s balance sheet and a source of cash; it would not be sub debt assets that were purchased by the bank.
My intuition is that you can’t use assets to fund RWA - it would have to be from the other side of the balance sheet. Am I thinking about this correctly?