Regulatory reviews include an assessment of capital, asset, quality, management, earnings, liquidity, and sensitivity to financial market conditions. Many types of strategies can result in more favourable regulatory reviews based on some criteria, but lessfavourable reviews based on other criteria. The financial institution is planning to issue more stocks, retain more of its earnings, increase its holdings of Treasury securities, and reduce its business loans in the commercial bank operations. It has historically been rated favourably by regulators, but the financial institution believes that these strategies will result in an even more favourable regulatory assessment. Which regulatory criteria will be affected by the financial institution’s strategies? How?
Regulatory reviews include an assessment of capital, asset, quality, management, earnings, liquidity, and sensitivity to financial market conditions. Many types of strategies can result in more favourable regulatory reviews based on some criteria, but lessfavourable reviews based on other criteria. The financial institution is planning to issue more stocks, retain more of its earnings, increase its holdings of Treasury securities, and reduce its business loans in the commercial bank operations. It has historically been rated favourably by regulators, but the financial institution believes that these strategies will result in an even more favourable regulatory assessment.
Which regulatory criteria will be affected by the financial institution’s strategies? How?
Step by step
Solved in 3 steps
