BFM- Basel III Case study
Information relating to capital & reserves of bank is ,
Bank A is as under---------------------- : Rs. in cr
Equity Capital----------------------------:2000
Non-cumulative Pref Share----------:1500
PNCP share-----------------------------:1000
General provision& loss--------------:800
Revaluation Reserve------------------:1700
Forex Transaction----------------------:300
Redeemable Pref share--------------:1000
Balance of P&L Account-------------:150
Risk Weighted Assets----------------:42000
Calculate
01. What is amount of of CET1 Capital
CET1=Equity Capital+Revaluation Reserve+Forex Transaction
=2000+765(1700*45=765)+225(300*75=225)+150
=3140
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02. What is amount of AT1 Capital
Solution
AT-1=PNCP share
=1000
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03. What is Tier -1 Capital
Solution
Tier-I Capital=CET1+AT1
=3140+1000
=4140
Tier-I CAR =Tier-I Capital/RWA
=4140/42000*100
=0.09857
=9.86%
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04. What is amount of Tier 2 capital
Solution
Tier-II =Non-Cumulative pref. share+General provision & loss+Redemable pref share
=1500+525(42000*1.25%)+1000
=3025
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05. What is total Capital Fund
Solution
Total Capital Fund=Tier-1+Tier-II
=4140+3025
=7165
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06. What is Capital Adequacy Ratio
Solution
CAR=Total Capital Fund/Risk weighted Assets
=7165/42000
=17.06%