16. Bank A has the following characteristics: Bank A 2,000 1,400 900 (in $ billion) Balance sheet size RWA Basel RWA Basel III* Common equity Tier capital Residual Tier I capital Tier Il capital 40 30 20 (a) Explain why the RWA calculated for Basel 1 is smaller than the balance sheet size. Illustrate your answer with examples. (5 marks) (b) Infer the risk profile of Bank A from the data provided above. (5 marks) (c) Calculate the minimum Tier I capital that Bank A needs in order to meet Basel III standards. Conclude if Bank A complies with this aspect of the requirements. (5 marks) (d) Explain the purpose of Basel III conservation buffer and how it would affect your answer in part (c). (5 marks) 16. Bank A has the following characteristics: Bank A 2,000 1,400 900 (in $ billion) Balance sheet size RWA Basel RWA Basel III* Common equity Tier capital Residual Tier I capital Tier Il capital 40 30 20 (a) Explain why the RWA calculated for Basel 1 is smaller than the balance sheet size. Illustrate your answer with examples. (5 marks) (b) Infer the risk profile of Bank A from the data provided above. (5 marks) (c) Calculate the minimum Tier I capital that Bank A needs in order to meet Basel III standards. Conclude if Bank A complies with this aspect of the requirements. (5 marks) (d) Explain the purpose of Basel III conservation buffer and how it would affect your answer in part (c)