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From the information below, calculate the Tier 1 risk-based capital ratio and total risk based capital ratio (SLC Conversion factor 10%, unused loan commitment conversion

From the information below, calculate the Tier 1 risk-based capital ratio and total risk based capital ratio

(SLC Conversion factor 10%, unused loan commitment conversion factor 20%) (Risk-weighting category: 0% for cash, equivalents and money market investments, 10% for Deposit at other banks and SLC, 50% for home loans, 100% for loan to Private Corporation, Unused commitment and fixed asset)

On balance sheet items (Asset) Cash $5,000 Cash equivalents $12,000 Deposit in other banks $150,000 Mortgages $75,000

PLC Loans $25,000 Total Balance Sheet Assets

$267,000

Off Balance sheet items Standby letter of credit $20,000 Long term unused loan commitments

$35,000

Total off balance sheet items

$55,000

Tier 1 Capital $18,000 Tier 2 Capital $26,000

Is it in compliance with the BASEL I requirements? If not, explain how the bank management can rearrange the balance sheet and off balance sheet items to achieve the compliance.

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