Question 2 Assets Cash UK government bonds OECD interbank loans. Uninsured mortgages Company loans WBS Bank:...
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Question 2 Assets Cash UK government bonds OECD interbank loans. Uninsured mortgages Company loans WBS Bank: Balance Sheet (£ millions) Liability Deposit Subordinated debts. Total 15 20 130 250 135 550 Equity Common stock Disclosed reserves Total According to the above balance sheet and the Basel I specifications, 370 90 85 5 550 a) Calculate the Tier 1 capital, Tier 2 capital, and risk weighted asset for WBS Bank under Basel I Accord. (10 marks) b) Calculate the capital adequacy ratios and explain whether the capital adequacy ratios meet the requirement of Basel I Accord. (7 marks) c) Critically discuss the rationale behind having capital adequacy requirements for banks and explain the relationship between the capital adequacy and investment choices for banks. (8 marks) (Total: 25 marks) Question 2 Assets Cash UK government bonds OECD interbank loans. Uninsured mortgages Company loans WBS Bank: Balance Sheet (£ millions) Liability Deposit Subordinated debts. Total 15 20 130 250 135 550 Equity Common stock Disclosed reserves Total According to the above balance sheet and the Basel I specifications, 370 90 85 5 550 a) Calculate the Tier 1 capital, Tier 2 capital, and risk weighted asset for WBS Bank under Basel I Accord. (10 marks) b) Calculate the capital adequacy ratios and explain whether the capital adequacy ratios meet the requirement of Basel I Accord. (7 marks) c) Critically discuss the rationale behind having capital adequacy requirements for banks and explain the relationship between the capital adequacy and investment choices for banks. (8 marks) (Total: 25 marks)
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Related Book For
Auditing and Assurance Services
ISBN: 978-0077862343
6th edition
Authors: Timothy Louwers, Robert Ramsay, David Sinason, Jerry Straws
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