Question
Refer to Table 1328. Onshore Bank has $29 million in assets, with risk-weighted assets of $19 million. Core Equity Tier 1 (CET1) capital is $900,000,
Refer to Table 1328. Onshore Bank has $29 million in assets, with risk-weighted assets of $19 million. Core Equity Tier 1 (CET1) capital is $900,000, additional Tier I capital is $250,000, and Tier II capital is $418,000. The current value of the CET1 ratio is 4.74 percent, the Tier I ratio is 6.05 percent, and the total capital ratio is 8.25 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions.
- The bank repurchases $109,000 of common stock with cash.
- The bank issues $2.9 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent.
- The bank receives $509,000 in deposits and invests them in T-bills.
- The bank issues $809,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating.
- The bank issues $1.9 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds.
- Homeowners pay back $4.9 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs.
A) The bank repurchases $109,000 of common stock with cash. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
B) The bank issues $2.9 million of CDs and uses the proceeds to issue category 1 mortgage loans with a loan-to-value ratio of 70 percent.
C) The bank receives $509,000 in deposits and invests them in T-bills. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
D) The bank issues $809,000 in common stock and lends it to help finance a new shopping mall. The developer has an A+ credit rating. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
E) The bank issues $1.9 million in nonqualifying perpetual preferred stock and purchases general obligation municipal bonds. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
F) Homeowners pay back $4.9 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. (Round your percentage answers to 2 decimal places. (e.g., 32.16))
\begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} Under the Basel III risk-based capital plan, each DI assigns its assets to one of several categories of credit risk exposure. Table 13-28 lists the key categories and assets in these categories. TABLE 13-28 Risk Weights for Calculating Risk-Weighted Assets for On-Balance-Sheet Items under Basel III 5. Exposures to public-sector entities (PSEs): General obligation exposures to U.S. PSEs Revenue obligation exposures to U.S. PSEs General obligation exposures to non-U.S. PSEs: CRC of 0-1 CRC of 2 CRC of 3 CRC of 4-7 OECD member with no CRC \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} \begin{tabular}{|l|l|l|} \hline CET1 ratio & % \\ \hline Tier I ratio & % \\ \hline \end{tabular} Under the Basel III risk-based capital plan, each DI assigns its assets to one of several categories of credit risk exposure. Table 13-28 lists the key categories and assets in these categories. TABLE 13-28 Risk Weights for Calculating Risk-Weighted Assets for On-Balance-Sheet Items under Basel III 5. Exposures to public-sector entities (PSEs): General obligation exposures to U.S. PSEs Revenue obligation exposures to U.S. PSEs General obligation exposures to non-U.S. PSEs: CRC of 0-1 CRC of 2 CRC of 3 CRC of 4-7 OECD member with no CRCStep by Step Solution
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