Worldwide Bank has the following balance sheet (in millions) and has $50 million commercial letter of...

  

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Worldwide Bank has the following balance sheet (in millions) and has $50 million commercial letter of credit. Assets Liabilities and Equity Cash $100 Deposits $1,425 Treasury bills $160 8-year Subordinated debts $70 Single family mortgage $720 Noncumulative perpetual $70 preferred stock Consumer loans $680 Common stock $45 Allowance for loan losses ($20) Retained earnings $30 Total $1,640 Total $1,640 10% of mortgage has been overdue for more than 90 days. (a) Calculate the following figures: (i) Risk-adjusted assets. (2 marks) (ii) CET1 risk-based capital ratio (in %). (2 marks) (iii) Tier I risk-based capital ratio (in %). (2 marks) (iv) Tier II capital. (2 marks) (v) Total risk-based capital ratio (in %). (2 marks) (vi) Tier I leverage ratio (in %). (2 marks) (b) HSBC announced stop paying final dividend in 2020 and dividends for the first three quarters in 2021 in response to the order made by the UK regulator. Explain the rationale of the regulator. (3 marks) Worldwide Bank has the following balance sheet (in millions) and has $50 million commercial letter of credit. Assets Liabilities and Equity Cash $100 Deposits $1,425 Treasury bills $160 8-year Subordinated debts $70 Single family mortgage $720 Noncumulative perpetual $70 preferred stock Consumer loans $680 Common stock $45 Allowance for loan losses ($20) Retained earnings $30 Total $1,640 Total $1,640 10% of mortgage has been overdue for more than 90 days. (a) Calculate the following figures: (i) Risk-adjusted assets. (2 marks) (ii) CET1 risk-based capital ratio (in %). (2 marks) (iii) Tier I risk-based capital ratio (in %). (2 marks) (iv) Tier II capital. (2 marks) (v) Total risk-based capital ratio (in %). (2 marks) (vi) Tier I leverage ratio (in %). (2 marks) (b) HSBC announced stop paying final dividend in 2020 and dividends for the first three quarters in 2021 in response to the order made by the UK regulator. Explain the rationale of the regulator. (3 marks)

Answer rating: 100% (QA)

Question a I Risk adjusted assets tier 1 capital tier 2 capital adequacy rati... View the full answer