Third Bank has the following balance sheet (in millions), with the risk weights in parentheses. (LG 13-7) Assets Liabilities and Equity Cash (0%) $ 20 Deposits $178 OECD interbank Subordinated debt deposits (20%) 25 (5 years) 3 70 Mortgage loans (50%) Cumulative preferred stock Consumer loans (100%) 70 Equity Total assets 2 2 $185 Total liabilities and equity $185 The cumulative preferred stock is qualifying and perpetual. In addition, the bank has $30 million in performance-related standby letters of credit (SLCs) to a BB+ rated corporation, $40 million in two-year forward FX contracts that are cur- rently in the money by $1 million, and $300 million in six- year interest rate swaps that are currently out of the money by $2 million. Credit conversion factors follow: Performance-related standby LCs 1- to 5-year foreign exchange contracts 1- to 5-year interest rate swaps 5- to 10-year interest rate swaps 50% 5% 0.5% 1.5%

a. What are the risk-adjusted on-balance-sheet assets of the bank as defined under the Basel Accord?

b. What is the total capital required for both off- and on- balance-sheet assets?

c. Does the bank have enough capital to meet the Basel requirements? If not, what minimum Tier 1 or total capi- tal does it need to meet the requirement?