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The Basel Capital Accords are the most important of the regulations that banks must satisfy. Consider a bank with the following assets on its balance
The Basel Capital Accords are the most important of the regulations that banks must satisfy. Consider a bank with the following assets on its balance sheet.
Asset | Amount ($m) | Risk Weighting (%) |
Cash | 200 | 0 |
Government Debt | 800 | 10 |
Bank Debt | 1,300 | 20 |
Mortgages | 4,600 | 50 |
Commercial Loans | 2,400 | 100 |
If this bank was required to hold 8% of its risk weighted assets as capital, calculate how much capital the bank would have to hold.
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