The Chief Executive Officer of Resilient Commercial Bank (RCB) operating in the Caribbean has asked his team of Charted Bank Analysts to conduct a critical assessment of the entitys financial statements to ascertain its financial health in preparing the bank for the annual review by the regulator of Commercial Banks and given the third wave of the COVD-19 pandemic. The team is asked to assessthe banks asset quality, capital adequacy, earnings, liquidity risk, sensitivity to market risk and the strength of its Board and Management Oversight function.

Section A 1. Economics Analysis (Macro or Micro Analysis) (5marks) a. An analysis of the current macro and micro economic environment in which the commercial bank is currently operating. Your analysis should include but not limited to the direction of economic growth, inflation, unemployment rate etc. Provide a forecast of how these economic variables will impact the bank.

2. Financial Analysis (10mark) a. Balance Sheet Review b. Income Statement Review/Profitability Assessments c. Ratio Analysis (Capital Adequacy, Asset Quality, Liquidity, Profitability, Leverage etc.)

3. Assessment of the general condition of the bank and make recommendations to senior management (10marks) Important Notes Management has been meeting on a weekly basis since the COVID 19 pandemic to assess its impact of the banks asset quality, liquidity, capital adequacy, earnings and sensitivity to market risk. The bank has a high concentration of loans directly related to the tourism sector. In the past the bank has been plagued by weak credit administration standards and poor underwriting practices.

The bank has hired several new loan officers to handle problem credits from the past and those that have emerged since the pandemic. Up until nine months ago the bank has no internal loan review function. Loan policy does not establish guidelines for portfolio mix by loan type. The regulatory requires require primary ratio of 10% and Risk Weighted Capital Adequacy (RCWA) of 13%. The bank introduced CD promotions in 2019 and 2020. While both promotions raised funds, management anticipates that upon maturity in September 2021 50% (40billion) of the balance will run off as investors will seeking new opportunities and better rates and the central bank has reduced the policy rate by 100 basis points to stimulate the economy due to the COVID 19 pandemic. The banks parent company continues to reduce its cash account which will most likely be depleted in only two years.

Section B a) Compare and contrast the operational risk, compliance and financial challenges faced RCB which operates in two jurisdictions (Jamaica, Trinidad or Barbados). Discuss how these challenges will impact the financial intuitions ability to offer a wide range of financial products to the public. (5marks)