Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $550,000, and Tier II capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. Homeowners pay back $5.9 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. CET1 ratio Tier I ratio Total capital ratio % % %
Onshore Bank has $39 million in assets, with risk-adjusted assets of $29 million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I capital is $550,000, and Tier II capital is $438,000. The current value of the CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital ratio is 8.06 percent. Calculate the new value of CET1, Tier I, and total capital ratios for the following transactions. a. Homeowners pay back $5.9 million of mortgages with loan-to-value ratios of 50 percent and the bank uses the proceeds to build new ATMs. CET1 ratio Tier I ratio Total capital ratio % % %
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Vishnu
Transcribed Image Text:Onshore Bank has $39 million in assets, with risk-adjusted assets of $29
million. Core Equity Tier 1 (CET1) capital is $1,350,000, additional Tier I
capital is $550,000, and Tier II capital is $438,000. The current value of the
CET1 ratio is 4.66 percent, the Tier I ratio is 6.55 percent, and the total capital
ratio is 8.06 percent.
Calculate the new value of CET1, Tier I, and total capital ratios for the
following transactions.
a. Homeowners pay back $5.9 million of mortgages with loan-to-value ratios
of 50 percent and the bank uses the proceeds to build new ATMs.
CET1 ratio
Tier I ratio
Total capital ratio
%
de do de
%
%
H
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