Based on the given information, please answer questions a, b, c, and d. Please also provide the solving process.

Bank A has the following balance sheet in millions of dollars. The risk weights as specified by the Basel capital standards are given in parentheses. Unless mentioned otherwise, all assets are held by corporate customers in millions of dollars.

Cash (0 percent) $50	Deposits $400
Municipal General Obligation Bonds(20%) $60	Convertible bonds $40
Residential 14 family Mortgages (50%) $100	Perpetual Preferred Stock (Nonqualifying) $20
Commercial loans, BB + rated (100% ) $200	Noncumulative Perpetual Preferred Stock (Qualifying) $22
High Volatility Loans (150%) $60	Common Stock $8
Securitization Exposures (1250%) $30	Retained Earnings $10
Total Assets $500	Total L&E: $500

Off balance Sheet

$40 million Direct-credit substitute standby letters of credit issued to a BBB + -rated U.S.corporation (credit conversion factor = 100 percent)

$40 million commercial letters of credit issued to a BBB - -rated U.S. corporation (credit conversion factor = 20 percent)

Off-balance sheet derivatives

$200 million 10-year interest rate swaps (Credit conversion factor= 1.5%. In the money by $0.5 million.)

$100 million 2-year forward DM contracts (Credit conversion factor= 5%. Out of the money by $2.5 million.)

a. What is the banks risk-adjusted assets as defined by the Basel standards for its on-balance-sheet assets only?

b. What is the risk-adjusted amount of the off-balance sheet items?

c. Calculate the RBC ratios of CET I, Tier I, total capital, and the Tier leverage ratio?

d. According to Basel III, which target zone does bank A fall into?

Basel III Capital Levels:

TABLE 13-3 Specifications of Capital Categories for Prompt Corrective Action (1) Common Equity Tier I Tier I Total Tier I Risk-Based Risk-Based Risk-Based Leverage Zone Ratio Ratio Ratio Ratio 1. Well capitalized 6.5% or above and 8% or and 10% or and 5% or above above above Capital Directive/Other and Not subject to a capital directive to meet a specific level for any capital measure 2. Adequately capitalized 4.5% or above and 6% or above and 8% or above and 4% or above and Does not meet the definition of well capitalized or or Under 4% 3. Undercapitalized Under 4.5% Under 6% or Under 8% 4. Significantly undercapitalized Under 3% or Under 6% or Under 8% 5. Critically undercapitalized Tangible equity/Total assets 32% or Under 4% TABLE 13-3 Specifications of Capital Categories for Prompt Corrective Action (1) Common Equity Tier I Tier I Total Tier I Risk-Based Risk-Based Risk-Based Leverage Zone Ratio Ratio Ratio Ratio 1. Well capitalized 6.5% or above and 8% or and 10% or and 5% or above above above Capital Directive/Other and Not subject to a capital directive to meet a specific level for any capital measure 2. Adequately capitalized 4.5% or above and 6% or above and 8% or above and 4% or above and Does not meet the definition of well capitalized or or Under 4% 3. Undercapitalized Under 4.5% Under 6% or Under 8% 4. Significantly undercapitalized Under 3% or Under 6% or Under 8% 5. Critically undercapitalized Tangible equity/Total assets 32% or Under 4%