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WBS Bank: Balance Sheet ( millions) Assets Liability Cash 15 Deposit 370 Subordinated debts 90 UK government bonds 20 OECD interbank loans 130 Uninsured
WBS Bank: Balance Sheet ( millions) Assets Liability Cash 15 Deposit 370 Subordinated debts 90 UK government bonds 20 OECD interbank loans 130 Uninsured mortgages Equity 250 Common stock 85 Company loans 135 Disclosed reserves Total 550 Total 550 According to the above balance sheet and the Basel I specifications, a) Calculate the Tier 1 capital, Tier 2 capital, and risk weighted asset for WBS Bank under Basel I Accord. (10 marks) b) Calculate the capital adequacy ratios and explain whether the capital adequacy ratios meet the requirement of Basel I Accord. (7 marks) c) Critically discuss the rationale behind having capital adequacy requirements for banks and explain the relationship between the capital adequacy and investment choices for banks.
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CAR 4380 As per BaselI accord CAR should be 8 since this bank holds ratio of 4380 it meets the requi...
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Fundamentals of Corporate Finance
Authors: Stephen A. Ross, Randolph W. Westerfield, Bradford D.Jordan
8th Edition
978-0073530628, 978-0077861629
