(a) FIM Bank has the following balance sheet (in millions), with the risk weights in parentheses. The bank has no off balance sheet activities. Assets Liabilities and Equity Cash (0%) $10 Deposits $271 OECD interbank deposits (20%) 10 Subordinated debts (10 years) 2 Mortgage loans (50%) 160 Non cumulative (perpetual) preference shares 2 Consumer loans (100%) 100 Equity 5 Total Assets $280 Total 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) 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 counter cyclical and systemic risk issues of Basel II (4 marks) (d) Explain why Basel III capital requirements are still unable to create a level competitive playing field across all banks on a global level (3 marks) (a) FIM Bank has the following balance sheet (in millions), with the risk weights in parentheses. The bank has no off balance sheet activities. Assets Liabilities and Equity Cash (0%) $10 Deposits $271 OECD interbank deposits (20%) 10 Subordinated debts (10 years) 2 Mortgage loans (50%) 160 Non cumulative (perpetual) preference shares 2 Consumer loans (100%) 100 Equity 5 Total Assets $280 Total 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) 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 counter cyclical and systemic risk issues of Basel II (4 marks) (d) Explain why Basel III capital requirements are still unable to create a level competitive playing field across all banks on a global level