Michael Bank currently has a portfolio made up of the following assets:

a) $1,000,000 secured loan,

b) $10,000,000 central government loan,

c) $8,000,000 commercial LOC,

d) $6,000,000 consumer loan, and

e) $8,800,000 standby LOC.

Calculate the amount of regulatory capital required to meet a capital adequacy ratio of 10% by employing the internal risk weighting and credit conversion factor for various assets and off-balance-sheet items as listed below. Illustrate the calculation clearly by showing the value and risk bucket group for each asset individually after conversion (if required) (15 marks):

Risk Bucket Loans	Risk Weights
1.	Domestic Central Govt.	0%
2.	Public Entities, Foreign Governments (OECD), Banking.	20%
3.	Secured Lending.	50%
4.	Commercial and consumer loans	100%

	Type	ccf
1.	Standby LOC, Guarantees	100%	Commercial and consumer loans
2.	LT Loan Commitments	50%	Commercial and consumer loans
3.	Commercial LOC	20%	Secured Lending