FIMBank has the following balance sheet (in millions),with the risk weights in parentheses.The bank has no off balance sheet activities.

AssetsLiabilities and EquityCash

(Risk Weight = 0%)

30Deposits185OECD interbank deposits

(Risk Weight= 20%)

35Subordinated Debt (10 years maturity)8Mortgage Loans(Risk Weight=50%)70Non cumulative (perpetual) preference shares5Consumer Loans(Risk Weight =100%)70Equity7Total Assets205Total Liabilities and Equity205

(a) Assuming that operational risk and market risk are zero, does the bank have enough capital to meet the Basel III Common Equity Tier 1, Total Tier 1 and Total capital requirements?[6 marks]

(b) In lectures, we discussed the strengths and weaknesses of risk-based capital requirements.Discuss the weaknesses of risk-based capital requirements under the Basel III framework.