New

Learn smart - Learn online. Upto 88% off on courses for a limited time. View Courses

Securing Higher Grades Costing Your Pocket? Book Your Assignment at The Lowest Price Now!
loader
Add File

Error goes here

Files Missing!

Please upload all relevant files for quick & complete assistance.

Guaranteed Higher Grade!

FIN20013 Banking Operations And Governance

tag 0 Download 6 Pages / 1,482 Words tag 06-11-2020

Question:

PART A

The book value of DRAGON SLAYER BANK’s balance sheet is listed below. The current market yield for the securities is in parentheses. The amounts are in millions. 
 

Asset

 

Liability & Equity

 

Cash

55

Demand deposits

300

6 month T-bills (4.25%)

50

Savings accounts (2.0%)

205

2 year personal fixed rate loan at 6.50%

100

3 month CD (2.50%)

150

3 year T bills (4.85%)

100

9 months CDs (3.85%)

150

3 year 5.5% semi-annual coupon

T-notes (5.25%)

90

1 year term deposit (4.0%)

520

5 year 6.2% semi-annual coupon

T-notes (5.75%)

100

2 year term deposits (4.30%)

200

5 year personal loan (11.5%, repriced yearly)

350

 

 

5 year bond 8.0% annual coupon issued by Spanish government with rating credit rating B

150

5-year bonds at 6.75% semiannual interest, balloon payment

250

 

 

20-year bonds at 7.5% interest, balloon payment

250

10 year commercial loan (12.25% repriced @ 6 months)

730

 

 

 

 

Subordinate notes:

 

15-year commercial loan at 10% interest (repriced monthly)

220

3-year fixed rate (5.65%)

230

20-year sovereign bonds 12.0% annual-coupon issued by

Cambodian government with BB rating

150

6-year fixed rate (6.00%)

150

 

 

Ordinary Equity

20

20-year mortgages at 8.5% interest (LVR 65%, no mortgage insurance), balloon payment^

390

Preference shares

20

 

 

Retained Earnings

40

Total Assets

2485

Total liability and equity

2485

Required

1. What is the cumulative repricing gap if the planning period is
  • 3 month
  • 2 year
2. What will happen to the net interest income of the bank, if interest on the banks rate sensitive assets is forecasted to decrease by 60 basis points and rate-sensitive liabilities to increase 25 basis points in 6 months’ time?
 
3. Due to the uncertainty in the economy, based on the bank’s estimate there is a potential of decrease in the demand deposits. What are some of the impact may that have on the bank’s overall asset-liability? 
 
4. Does the bank have sufficient liquid capital to cushion any unexpected losses as per the Basle III requirement? (ignore cyclical buffer requirement)

PART B

The following is the balance sheet of a VRY-SMPL Bank. All the items are recorded based on the

book value and they were purchased at par value.  

Asset

Liability

5 year semi-annual 6.45%pa coupon bond

250

6 months treasury bills

250

10 year 3.5% annual coupon bond

100

3 year semi annual coupon 5.50% bond

200

10 year treasury bond 7.5 % semi annual coupon

350

6 year annual coupon (6.30%pa) bond

200

 

 

Equity

50

 

700

 

700

5. Assume current market yield is flat at 6.5% p.a. What is the duration gap of the bank 

6. Using the duration gap estimated from question 6, what will happen to the net worth of the bank if the market yield goes up by 5%p.a.?

7. What is the maturity gap of the bank 

PART C 

The Basel Banking supervision committee has proposed the Basle III standards.

  • Compare and discuss the differences between Basle II and the Basle
  • What are some of the requirements (and issues) faced by the financial institutions in trying to meet these new requirements?

Some notes:

  • Question 2 - Read Chapter 5. Or refer tutorial (topic 5) question 16
  • Questions 2 to 4 - There is no word limit. However if you know the key issues, you should be able to explain your answer within 500
  • Question 4, To avoid any confusion, please use the following link from APRA for conversion purpose. You mainly only require to refer to Attachment A and Attachment 
Download Sample Now

Earn back the money you have spent on the downloaded sample by uploading a unique assignment/study material/research material you have. After we assess the authenticity of the uploaded content, you will get 100% money back in your wallet within 7 days.

Upload
Unique Document

Document
Under Evaluation

Get Money
into Your Wallet

Total 6 pages

Cite This Work

To export a reference to this article please select a referencing stye below:

My Assignment Help. (2020). Banking Operations And Governance. Retrieved from https://myassignmenthelp.com/free-samples/fin20013-banking-operations-and-governance/balance-sheet.html.

My Assignment Help (2020) Banking Operations And Governance [Online]. Available from: https://myassignmenthelp.com/free-samples/fin20013-banking-operations-and-governance/balance-sheet.html
[Accessed 15 August 2022].

My Assignment Help. 'Banking Operations And Governance' (My Assignment Help, 2020) <https://myassignmenthelp.com/free-samples/fin20013-banking-operations-and-governance/balance-sheet.html> accessed 15 August 2022.

My Assignment Help. Banking Operations And Governance [Internet]. My Assignment Help. 2020 [cited 15 August 2022]. Available from: https://myassignmenthelp.com/free-samples/fin20013-banking-operations-and-governance/balance-sheet.html.


We Can Help!

Get top notch assistance from our best tutors !
Excel in your academics & career in one easy click!

icon

Other Samples

Content Removal Request

If you are the original writer of this content and no longer wish to have your work published on Myassignmenthelp.com then please raise the content removal request.

icon

5% Cashback

On APP - grab it while it lasts!

Download app now (or) Scan the QR code

*Offer eligible for first 3 orders ordered through app!

screener
ribbon
callback request mobile
Have any Query?