GlobalBankCrdit Financial Holdings PLC has the following assets on its balance sheet:

Asset	Amount
Cash and equivalents	$5,000,000
Government securities	$1,500,000,000
Interbank loans	$100,000,000
Mortgage loans	$2,000,000,000
Ordinary loans
BBB+ - BBB-	$300,000,000
AAA AA-	$550,000,000
Standby letters of credit	$81,000,000

1. Using the risk weights from the lecture slides, calculate GlobalBankCrdit Financial Holdings PLCs total risk weighted assets.
2. Using Basel II standards, calculate GlobalBankCrdit Financial Holdings PLCs total (Tier 1 and 2) minimum capital requirement.
3. GlobalBankCrdit 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.
4. GlobalBankCrdit 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.
5. Discuss what GlobalBankCrdit Financial Holdings PLC might do to comply with the Basel III standards.
6. Discuss what could happen if GlobalBankCrdit Financial Holdings PLC fails to meet these new requirements.

Use the two templates below to answer Questions 1, 2, 3, & 4.

Q 1, 2, & 3

	Amount	Risk Weight	Risk-adjusted Asset
Cash and equivalents	$5,000,000
Government securities	$1,500,000,000
Interbank loans	$100,000,000	100%	100,000,000
Mortgage loans	$2,000,000,000	35%	700,000,000
Ordinary loans
BBB+ - BBB-	$300,000,000	100%	300,000,000
AAA AA-	$550,000,000	20%	110,000,000
Standby letters of credit	$81,000,000	100%	81,000,000
Total	$4,536,000,000		1,291,000,000,00
	Basel II	8%
	Basel III	8%

Q4

Asset	Amount	Risk Weight	Risk-adjusted Asset
Cash and equivalents	$5,000,000
Government securities	$1,500,000,000
Interbank loans	$100,000,000
Mortgage loans	$2,000,000,000
Ordinary loans	$0
BBB+ - BBB-	$377,000,000
AAA AA-	$473,000,000
Standby letters of credit	$81,000,000
Total	$4,536,000,000
	Basel II
	Basel III

Q5. Q6.