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GlobalBankCredit Financial Holdings PLC has the following assets on its balance sheet: Assets 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 1. Calculate GlobalBankCrédit Financial Holdings PLC’s total risk weighted assets. 2. Using Basel II standards, calculate GlobalBankCrédit Financial Holdings PLC’s total (Tier 1 and 2) minimum capital requirement. 3. 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. 4. 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. 5. Discuss what GlobalBankCrédit Financial Holdings PLC might do to comply with the Basel III standards. 6. Discuss what could happen if GlobalBankCrédit Financial Holdings PLC fails to meet these new requirements.

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92352023

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