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HSBC Bank has the following entries on its balance sheet (expressed in $billion) ESF Accumulated retained profit Certificates of Deposits on issue Loans to households
HSBC Bank has the following entries on its balance sheet (expressed in $billion) ESF Accumulated retained profit Certificates of Deposits on issue Loans to households Capital notes on issue Demand deposits of customers Shares on issue Provisions for bad and doubtful debt Loans to another bank Capital Reserve Shares investment (trading) Government securities (available for sale) 62 327 154 428 6 124 25 32 376 296 22 76 1. Build HSBC Bank's balance sheet incorporating all the above items. (Incorporate all the items in one single balance sheet. Identify the balance sheet item name and the value) a. Identify the components of HSBC Bank's regulatory total capital and calculate the regulatory total capital 2. Starting from the situation described in (1) consider the following operations: a. Market value of shares held by HSBC Bank for trading purposes decreases by $3 billion b. Market value of the government bonds held by HSBC Bank for liquidity purposes increases by $1 billion C. HSBC Bank writes off $4 billion of loans made to households, and has access to the lending provisions from (1) d. HSBC Bank receives $6 billion coupons from governments that do not have an account in the bank e. HSBC buys equipment for $0.4 billion from a company that is a customer of the bank i. Using a new balance sheet (separate from (1), represent the effect of the 5 operations above on the balance sheet of HSBC. (Only represent variations, not new levels. Clearly identify the balance sheet items name, the variation sign, and the value. Indicate the numbering of the transaction at the end of each entry. You are allowed to add new entry names if you need them)
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