Asset Amount Cash and equivalents Government securities $5,000,000 $1,500,000,000 $100,000,000 $2,000,000,000 Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- AAA-AA- Standby letters of credit $300,000,000 $550,000,000 $81,000,000 a.) Calculate Global Bank Crdit Financial Holdings PLC's total risk weighted assets. b.) Using Basel Il standards, calculate Global Bank Crdit Financial Holdings PLC's total (Tier 1 and 2) minimum capital requirement. c.) Global Bank Crdit Financial Holdings PLC must meet the Basel III maximum capital requirement by next year. Calculate the effect this would have on its minimum capital requirement given the current state of its assets. d.) Global Bank Crdit Financial Holdings PLC estimates that 14% of its AAA to AA-rated loans are at risk for a downgrade to BBB+. Calculate the effect this would have on its minimum capital requirement. e.) Discuss what Global Bank Crdit Financial Holdings PLC might do to comply with the Basel III standards. f.) Discuss what could happen if Global Bank Crdit Financial Holdings PLC fails to meet these new requirements. a.), b.), c.) Cash and equivalents Government securities Risk-adjusted Amount Risk Weight Asset $5,000,000 0 $1,500,000,000 0 $100,000,000 0.2 or 20% $2,000,000,000 0.5 or 50% Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- AAA-AA- Standby letters of credit Total $300,000,000 1.0 or 100% $550,000,000 0.2 or 20% $81,000,000 1.0 or 100% $4,536,000,000 Basel II Basel III d.) Asset Risk-adjusted Asset Cash and equivalents Government securities Risk Amount Weight $5,000,000 0 $1,500,000,000 0 $100,000,000 0.2 or 20% $2,000,000,000 0.5 or 50% Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- $0 1.0 or $377,000,000 100% $473,000,000 0.2 or 20% AAA-AA- Standby letters of credit 1.0 or 100% $81,000,000 $4,536,000,000 Total Basel 11 Basel III Asset Amount Cash and equivalents Government securities $5,000,000 $1,500,000,000 $100,000,000 $2,000,000,000 Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- AAA-AA- Standby letters of credit $300,000,000 $550,000,000 $81,000,000 a.) Calculate Global Bank Crdit Financial Holdings PLC's total risk weighted assets. b.) Using Basel Il standards, calculate Global Bank Crdit Financial Holdings PLC's total (Tier 1 and 2) minimum capital requirement. c.) Global Bank Crdit Financial Holdings PLC must meet the Basel III maximum capital requirement by next year. Calculate the effect this would have on its minimum capital requirement given the current state of its assets. d.) Global Bank Crdit Financial Holdings PLC estimates that 14% of its AAA to AA-rated loans are at risk for a downgrade to BBB+. Calculate the effect this would have on its minimum capital requirement. e.) Discuss what Global Bank Crdit Financial Holdings PLC might do to comply with the Basel III standards. f.) Discuss what could happen if Global Bank Crdit Financial Holdings PLC fails to meet these new requirements. a.), b.), c.) Cash and equivalents Government securities Risk-adjusted Amount Risk Weight Asset $5,000,000 0 $1,500,000,000 0 $100,000,000 0.2 or 20% $2,000,000,000 0.5 or 50% Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- AAA-AA- Standby letters of credit Total $300,000,000 1.0 or 100% $550,000,000 0.2 or 20% $81,000,000 1.0 or 100% $4,536,000,000 Basel II Basel III d.) Asset Risk-adjusted Asset Cash and equivalents Government securities Risk Amount Weight $5,000,000 0 $1,500,000,000 0 $100,000,000 0.2 or 20% $2,000,000,000 0.5 or 50% Interbank loans Mortgage loans Ordinary loans BBB+ - BBB- $0 1.0 or $377,000,000 100% $473,000,000 0.2 or 20% AAA-AA- Standby letters of credit 1.0 or 100% $81,000,000 $4,536,000,000 Total Basel 11 Basel