United Bank has a balance sheet below (the risk weights of the assets are in the parentheses): Assets Value ($ million) Liabilities and Equity Value ($ million) Cash 63 Deposits 528 OECD interbank deposits (20%) 75 Subordinated debt (5 years) 6 Mortgage loans (50%) 210 Noncumulative preferred stock (qualified and perpetual) 6 Consumer loans (100%) 210 Retained earnings 2 Reserve for loan losses (3) Equity 13 Total assets 555 Total liabilities and equity 555 In addition, the United Bank has the following off-balance activities: $90 million in performance-related standby letters of credit (SLCs) to a public corporation, $120 million in two-year forward FX contracts that are currently in the money by $3 million, and $900 million in six-year interest rate swaps that are currently out of the money by $6 million. According to the Basel Accord, the credit conversion factors and the risk weights are: Credit conversion factors Risk weights Performance-related standby LCs 50% 100% 1 to 5-year foreign exchange contracts 5% 100% 1 to 5-year interest rate swaps 0.5% 100% 5 to 10-year interest rate swaps 1.5% 100% The capital adequacy ratio: Adequately capitalized zone Well capitalized zone CET1 capital 4.5% 6.5% Tier I capital 6% 8% Total capital required 8% 10% Required: a. Calculate the risk-weighted on-balance-sheet assets, risk-weighted off-balance-sheet assets and total risk-weighted assets respectively for the United Bank as defined under the Basel Accord. (5 marks) b. According to the total risk-weighted assets, calculate the CET1, Tier I, and total capital required in terms of adequately capitalized zone. Does the United Bank currently have enough capital to meet the Basel requirements of adequately capitalized zone? If not, what minimum CET1, additional Tier 1, or/and total capital does it need to meet the requirement? (6 marks) c. According to your calculation above, work out the new balance sheet that meets the capital adequacy ratios of adequately capitalized zone. (4 marks) d , What buffers and/or surcharge may be applied to some banks capital adequacy ratios and why? (3 marks