a) Describe what happens if one of the bank's largest depositors decides to switch its main corporate account to another bank, transferring its current balance of $2m from North West London Bank.

b) Calculate the new reserve to deposit ratio.

c) Provide three options for the bank to address its liquidity needs at this stage and rank them by how expensive they are likely to be.

Consider the balance sheet of North West London Bank. Assume that the bank would like to keep a constant fraction of reserves to deposits of around 5%. Assume the bank's initial balance sheet position is as follows: 4.5m (Reserves) 85m (Loans) 10.5m (Securities) NWLB 90m (Deposits) 10m (Capital)