Question

Amount ($b) 4.5 5.5 190 60 150 410 Risk Weight 0% 0% 5% 100% 100% Asset Risk Weighted Assets ES funds T-notes and CG bonds Home loans (LVR < 80%) Home loans (LVR > 85%) Business loans Total 142.5 60 150 352.5 The bank has the following types of capital CETI $20b-5.7% Total Tier 1-$24.1 b-6.896, Total Equity-$25.5b.:7.2% Does the bank meet its capital adequacy requirements? Yes, everything is fine No, it is violating all minimum capital adequacy ratios No, it has enough total capital but insufficient CET1

Answer 1

Ans. No , it has enough total capital but insufficient CET 1 .

This statement is correct because the ratio of CET1 capital and the risk weighed assets is below 5.7%.

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