Bank P has the following assets and liabilities:

Cash	4	Retail deposits (‘stable’)	20
Treasury Bonds (> 1 year)	6	Retail deposits (‘less stable’)	20
Corporate Bonds with A+ rating	10	Wholesale deposits	45
Equity securities	10	Borrowings	5
Loans to small business customers	40	Tier 2 capital	5
Non-current assets	30	Tier 1 capital	5
TOTAL	100	TOTAL	100

The bank has a target NSFR of at least 100%.

Required:

a)      Calculate Bank P’s Net Stable Funding Ratio (NSFR) and state whether it meets the target.

b)      Calculate the value of new ‘less stable’ deposits required by Bank P in order to achieve a NSFR of 100%, assuming Bank P invests the new funds in equity securities.

Answer rating: 100% (QA)

a Net Stable Funding Ratio NSFR Stable funding Required stable funding x 100 Stable ... View the full answer