Calculate total risk weighted assets

Assignment Help Financial Management

Reference no: EM131530826

GlobalBankCrédit Financial Holdings PLC has the following assets on its balance sheet:

Asset

Amount Cash and equivalents $5,000,000

Government securities $1,500,000,000

Interbank loans $100,000,000

Mortgage loans $2,000,000,000

Ordinary loans

BBB+ - BBB- $300,000,000

AAA – AA- $550,000,000

Standby letters of credit $81,000,000

a. Calculate GlobalBankCrédit Financial Holdings PLC’s total risk weighted assets.

b. Using Basel II standards, calculate GlobalBankCrédit Financial Holdings PLC’s total (Tier 1 and 2) minimum capital requirement.

c. GlobalBankCrédit Financial Holdings PLC estimates that 14% of its AAA to AA- rated loans are at risk for a downgrade to BBB+. Calculate the effect this would have on its minimum capital requirement.

d. GlobalBankCrédit Financial Holdings PLC must meet the Basel III maximum capital requirement by next year. Calculate the effect this would have on its minimum capital requirement given the current state of its assets.

e. Discuss what GlobalBankCrédit Financial Holdings PLC might do to comply with the Basel III standards.

f. Discuss what could happen if GlobalBankCrédit Financial Holdings PLC fails to meet these new requirements.

Reference no: EM131530826

Questions Cloud

The shortfalls of the dividend discount model : What do you think are the shortfalls of the dividend discount model?

What is the modified duration of the bond : A bond with 3 years to maturity and 9% coupon rate is selling at YTM of 11%. The bond has a face value of $1000. What is the modified duration of the bond?

Based on the annual worth method of study : Your study period is 6 years and your MARR = 20%. Based on the annual worth (Aw) method of study, which motor should you buy and buy how much?

Value at risk for the portfolio : What is the three day 99% value at risk for the portfolio?

Calculate total risk weighted assets : Calculate GlobalBankCrédit Financial Holdings PLC’s total risk weighted assets.

What happens to the expected return on the stock : If Northern Sludge issues an additional $24 million of common stock and uses this money to retire debt, what happens to the expected return on the stock?

What is the firm after-tax cost of debt : what is the firm's after-tax cost of debt?

Affect the decision-making process : In equipment-replacement decisions, which one of the following does not affect the decision-making process?

Would turning back the odometer be an ethical action : Perkins intended to sell his two-year- old automoblie through an advisement online. Would turning back the odometer be an ethical action?

User Account

All Pages