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Answer: Total capital ratio and CET1 capital ratio only
The correct answer is D, which states that the bank must satisfy both the Total capital ratio and CET1 capital ratio as of January 2017. This is based on the calculations provided: 1. The bank's CET1 capital ratio is calculated as (CET 1 capital)/(risk-weighted assets), which equals (1,515/26,395) = 5.74%. This ratio exceeds the minimum requirement of 5.25%. 2. The bank's leverage ratio is calculated as (Tier 1 capital)/(Exposure), which equals (1,515 + 100)/(47,460) = 3.40%. This ratio does not meet the minimum requirement of 4.0%. 3. The bank's Tier 1 capital ratio is calculated as (Tier 1 capital)/(risk-weighted assets), which equals (1,515 + 100)/26,395 = 6.12%. This ratio does not meet the minimum requirement of 6.75%. 4. The bank's Total capital ratio is calculated as (Total capital)/(risk-weighted assets), which equals (1,515 + 100 + 827)/26,395 = 9.25%. This ratio meets and exceeds the minimum requirement of 8.75%. Therefore, the bank must satisfy the Total capital ratio and CET1 capital ratio to comply with the regulations as of January 2017.
Author: LeetQuiz Editorial Team
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Based on the regulatory standards and Bank LGX's performance, which capital requirements does the bank meet as of January 2017?
CET1 capital: 1,515
Additional Tier 1 capital: 100
Tier 2 capital: 827
Risk-weighted assets (RWA): 26,395
Exposure (for leverage ratio): 47,460
Regulatory minimums (as of Jan 2017):
CET1 ratio: 5.25%
Tier 1 ratio: 6.75%
Total capital ratio: 8.75%
Leverage ratio: 4.0%
CET1 capital: 1,515
Additional Tier 1 capital: 100
Tier 2 capital: 827
Risk-weighted assets (RWA): 26,395
Exposure (for leverage ratio): 47,460
Regulatory minimums (as of Jan 2017):
CET1 ratio: 5.25%
Tier 1 ratio: 6.75%
Total capital ratio: 8.75%
Leverage ratio: 4.0%
A
CET1 capital ratio only
B
Leverage ratio only
C
Tier 1 capital ratio and Leverage ratio only
D
Total capital ratio and CET1 capital ratio only
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