a) FIM Bank has the following balance sheet (in millions), with the risk weights in parentheses. The bank has no off balance sheet activities.

AssetsLiabilities and EquityCash (0%)$10Deposits$271OECD interbank deposits (20%)10Subordinated debts (10 years)2Mortgage loans (50%)160Non cumulative (perpetual) preference shares2Consumer loans (100%)100Equity5Total Assets$280Total liabilities and equity$280

Assuming that operational risk and market risk are both zero, does the bank have enough capital to meet the Basel III Common Equity Tier 1, Total Tier 1, Total capital requirements?(1 mark)

(b) Explain the reasons why some off-balance sheet instruments are excluded in the calculation of credit risk adjusted off-balance sheet asset value(2 marks)

(c) Explain how capital buffers imposed in Basel III attempt to address countercyclical and systemic risk issues of Basel II(4 marks)

(d) Explain why Basel III capital requirements are still unable to level competitive playing field across all banks on a global level(3 marks)