As of 1 Jan 2020, Alliance Bank has the following balance sheet and no off balance sheet transactions or securitisation activities Assets Liabilities and equity Cash $24 Deposits $1176 Australian Treasury Bonds $48 Subordinated debt $50 Loans to Australian corporates rated BBB $660 Common equity $78 Fixed assets $276 Retained earnings $12 Total assets $1008 Total liabilities and equity $1008 Transactions during 2020 (a) February Uninsured mortgages of LVR 90 amounting to $50mn were given out, funded from interbank loans on the wholesale market (b) March Bank sold down some real estate and its fixed assets went down to $176mn The proceeds from sale of $100mn was invested in Australian Treasury bonds (c) April Bank gave out loan commitment with certain drawdown of $15mn to a resource company with credit rating BBB for a mining exploration project (d) May The Treasury desk of Alliance Bank entered into a forward foreign exchange contract with notional exposure of $100mn with current exposure of $2 5mn, maturity of 4 years The counterparty was BHP mining which has credit rating of A What is the new common equity Tier 1 ratio of the bank after the transaction in February 2020 Using the financial data as of 1 January 2020 and ignoring the transactions in February and March, what is the new risk weighted assets of this bank at end April after the April transaction Using the financial data as of 1 January 2020 and ignoring the transactions in February, March and April, what is the new risk weighted assets of this bank after the May transaction What is the total risk weighted assets of this bank on 1 January 2020 What is the common equity Tier 1 (CET1) capital of this bank as of 1 January 2020 What is the new risk weighted assets of the bank after the transaction in February 2020 Using the 1 Jan 2020 balance sheet information and only the March 2020 transaction (ignoring February 2020 transaction), what is the new Total Capital Adequacy Ratio (CAR) of Alliance Bank Using the 1 Jan 2020 balance sheet information and only the March 2020 transaction (ignoring February 2020 transaction), what is the new risk weighted assets of Alliance Bank What is the total risk weighted assets of this bank on 1 January 2020 Using the financial data as of 1 January 2020 and all the transactions in February, March, April and May, what was Alliance Bank's total regulatory capital adequacy ratio after the May transaction

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Posted on Apr 20, 2024

As of 1 Jan 2020, Alliance Bank has the following balance sheet and no off-balance sheet transactions or securitisation activities. Assets Liabilities and equity

As of 1 Jan 2020, Alliance Bank has the following balance sheet and no off-balance sheet transactions or securitisation activities.

Assets		Liabilities and equity
Cash	$24	Deposits	$1176
Australian Treasury Bonds	$48	Subordinated debt	$50
Loans to Australian corporates rated BBB+	$660	Common equity	$78
Fixed assets	$276	Retained earnings	$12
Total assets	$1008	Total liabilities and equity	$1008

Transactions during 2020

(a) February : Uninsured mortgages of LVR 90% amounting to $50mn were given out, funded from interbank loans on the wholesale market.

(b) March : Bank sold down some real estate and its fixed assets went down to $176mn. The proceeds from sale of $100mn was invested in Australian Treasury bonds.

(c) April : Bank gave out loan commitment with certain drawdown of $15mn to a resource company with credit rating BBB+ for a mining exploration project.

(d) May : The Treasury desk of Alliance Bank entered into a forward foreign exchange contract with notional exposure of $100mn with current exposure of $2.5mn, maturity of 4 years. The counterparty was BHP mining which has credit rating of A.

What is the new common equity Tier 1 ratio of the bank after the transaction in February 2020?
Using the financial data as of 1 January 2020 and ignoring the transactions in February and March, what is the new risk-weighted assets of this bank at end-April after the April transaction?
Using the financial data as of 1 January 2020 and ignoring the transactions in February, March and April, what is the new risk-weighted assets of this bank after the May transaction?
What is the total risk-weighted assets of this bank on 1 January 2020?
What is the common equity Tier 1 (CET1) capital of this bank as of 1 January 2020?
What is the new risk-weighted assets of the bank after the transaction in February 2020?
Using the 1 Jan 2020 balance sheet information and only the March 2020 transaction (ignoring February 2020 transaction), what is the new Total Capital Adequacy Ratio (CAR) of Alliance Bank?
Using the 1 Jan 2020 balance sheet information and only the March 2020 transaction (ignoring February 2020 transaction), what is the new risk-weighted assets of Alliance Bank?
What is the total risk-weighted assets of this bank on 1 January 2020?
Using the financial data as of 1 January 2020 and all the transactions in February, March, April and May, what was Alliance Bank's total regulatory capital adequacy ratio after the May transaction?

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To answer these questions we need to calculate the riskweighted assets for each category of exposures We will ignore the transactions in February and ... blur-text-image