Bank Z has the following balance sheet (in millions of dollars) with the risk weights for assets shown Assets Risk Weight s Liabilities & Equity $ Cash 0 30 Consumer deposits 262.5 Inter-bank deposits 0.2 37.5 Subordinated debt 4.5 residential mortgages 105 Cumulative preference shares 7.5 Business Loans 1.25 120 Ordinary shares 3 Total Assets 277.5 Total Liabilities & Equity 277.5 0.3 In addition, Bank Z has $20 million in performance-related standby letters of credit (SLCs), $15 million in two-year forward FX contracts that are currently in the money by $0.5 million, and $125 million in six-year interest rate swaps that are currently out of the money by $1 million. All off-balance sheet items carry a risk weight of 100%. Credit conversion factors are: Performance-related standby SLC 50% 1 to 5 year foreign exchange contracts 5% 1 to 5 year interest rate swaps 0.5% 5 to 10 year interest rate swaps 1.5% Total Capital Tier 1 Leverage Tangible Strength Ratio Ratio Ratio Equity Ratio Well Capitalised >= 10% and >= 6% and >= 5% Adequately Capitalised >= 8% and >= 4% and >= 4% Undercapitalised >= 6% and >= 3% and >= 3% Significantly Undercapitalised 2% Critically Undercapitalised = 10% and >= 6% and >= 5% Adequately Capitalised >= 8% and >= 4% and >= 4% Undercapitalised >= 6% and >= 3% and >= 3% Significantly Undercapitalised 2% Critically Undercapitalised