Assignment Instruction are attached in a word file
Assignment Instructions: The assignment is separated into two parts and must be 2600 words: Part A (1300 words): 1. The following is a summary of the accounts of Foverer Bank (£bn) Balance Sheet Assets Cash & balances with central banks 115,465 Derivative financial instruments 63,141 Net loans and advances to customers Other securities 250,742 32,400 Other assets 1,450 premises etc 20,500 total assets 483,698 Liabilities Customer deposits 160,452 Bank deposits 10,460 Short term funding 36,700 LT Borrowings and debt securities in issue (at historical cost) 150,450 Derivative financial instruments 15,700 Trading liabilities 2,500 total liabilities 376,262 Equity Common equity: par value + capital surplus 34,250 Other Reserves 5,000 Shareholders equity 65,500 Retained earnings 2,686 total equity 107,436 total liabilities and equity 483,698 Income statement Net Interest Revenue 20,002 Other Operating Income 25,800 Net Gains (Losses) on Trading and Derivatives 1,183 Net Gains (Losses) on Assets at FV through Income Statement 500 47,485 less: Net Fees and Commissions 15,828 Overheads 25,924 Loan Loss Provisions 672 Other 800 43,224 Profit before Tax 4,261 Tax 1,255 Net Income ? Additional data: · Market capitalisation: £ 183,567 · Off-balance sheet items: £ 414,238 Calculate the following (650 words) i)Cash Reserve ratio. ii)Liquidity coverage ratio. iii)Burden ratio. iv)market-to-book ratio. v)Net interest margin For each calculation: present the following (mandatory): · Fully explanation of the workings including formulas, results, assumptions and whey they are relevant to the bank. Explain in detail. The workings must be visible and not only the final result (ratio). Explain what this ratio means for the bank why it is positive or negative, and the final outcome of the results. What does the above ratios results indicate for the bank financial performance? 2. Evaluate the benefits and drawbacks of asset backed securitization from the perspective of a commercial bank (650 words) · Use academic journals, books, and not websites. Use reference under Harvard Style. Discuss asset back securitization, discuss the benefits, the drawbacks from the research you done. Then give a fully detail evaluation based on the analysis and research you done. Part B: 3. In the aftermath of the Global Financial Crisis (GFC) of 2008, Basel III regulations were adopted. Some of these regulations relate to stress tests conducted by banks and supervisory authorities. Explain the concept of stress testing and discuss the benefits and limitations of stress tests. (650 words) · Explain and discuss what is stress-testing and why and how it is used on banks and supervisory authorities. What stress-testing result indicates? Discuss about Basel III regulations regarding stress-testing. Discuss the benefits and limitations and evaluate on these. · Use academic journals, books, and not websites. Use reference under Harvard Style. 4. Money laundering is one of the main issues faced by banks worldwide. Explain money laundering and its stages; and discuss the following statement: “The current regulatory framework does not do enough to help banks and financial institutions protect themselves against money laundering, more regulation is needed”. (650 words) · Discuss and explain the process of Money Laundering · Why money laundering is used from banks and financial institutions and how it helps them · Describe in detail the stages of money laundering. · Research, discuss and analyse the statement that current regulatory framework does not do enough to help banks and financial institutions protect themselves against money laundering and why more regulation is needed. Explain the current regulations and its limitations, why new regulation is needed and propose new regulations. · Use academic journals, books, and not websites. Use reference under Harvard Style