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15 CHAPTER LIQUIDITY RISK Chapter outline Causes of Liquidity Risk Liquidity Risk at Banks and Other Depository Institutions Liability-Side Liquidity Risk Asset-Side Liquidity Risk Purchased Liquidity Management Stored Liquidity Management Measuring a Depository Institution's Liquidity Exposure Sources and Uses of Liquidity Peer Group Ratio Comparisons Liquidity Index Financing Gap and the Financing Requirement The BIS Approach: Maturity Ladder/Scenario Analysis Liquidity Planning Immediate Liquidity Obligations Seasonal Short-term Liquidity Trend Liquidity Needs Cyclical Liquidity Needs Contingent Liquidity Needs Liquidity Risk, Unexpected Deposit Drains, and Bank Runs Deposit Drains and Bank Runs Liquidity Risk Bank Runs, the Discount Window and Deposit Insurance Financial System Stability and Liquidity Reserve Bank Role in Maintaining Financial System Stability Financial Institution Instability: The Australian Experience Financial Institutions' Losses in the 1990s Financial Institutions' Losses in the 2000s ADI Liquidity Regulations Liquidity Regulations -- Historic Perspective Liquidity Risk and Life Insurance Companies Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 1 Liquidity Risk and General Insurers Managed Funds The Supply of Shares of an Open-end Managed Fund Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 2 Answers to end-of-chapter questions QUESTIONS AND PROBLEMS 1. How does the degree of liquidity risk differ for different types of financial institutions? Depository institutions are the FIs most exposed to liquidity risk. Managed funds, pension funds, superannuation funds and property-casualty insurance companies are the least exposed. In the middle are life insurance companies. 2. What are the two reasons why liquidity risk arises? How does liquidity risk arising from the liability side of the balance sheet differ from liquidity risk arising from the asset side of the balance sheet? What is meant by fire-sale prices? Liquidity risk occurs because of situations that develop from economic and financial transactions that are reflected on either the asset side of the balance sheet or the liability side of the balance sheet of an FI. Asset-side risk arises from transactions that result in a transfer of cash to some other asset, such as the exercise of a loan commitment or a line of credit. Liability-side risk arises from transactions whereby a creditor, depositor, or other claim holder demands cash in exchange for the claim. The withdrawal of funds from a bank is an example of such a transaction. A fire-sale price refers to the price of an asset that is less than the normal market price because of the need or desire to sell the asset immediately under conditions of financial distress 3. What are core deposits? What role do core deposits play in predicting the probability distribution of net deposit drains? Core deposits are those deposits that will stay with the bank over an extended period of time. These deposits are relatively stable sources of funds and consist mainly of demand, savings, and retail time deposits. Because of their stability, a higher level of core deposits will increase the predictability of forecasting net deposit drains from the bank. 4. The probability distribution of the net deposit drain of a DI has been estimated to have a mean of 2 per cent and a standard deviation of 1 per cent. Is this DI increasing or decreasing in size? Explain. This bank is decreasing in size because less core deposits are being added to the bank than are being withdrawn. On average, the rate of decrease of deposits is 2 per cent. If the distribution is normal, we can state with 95 per cent confidence that the rate of decrease of deposits will be between 0 per cent and 4 per cent (plus or minus two standard deviations). 5. How is a DI's distribution pattern of net deposit drains affected by the following? Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 3 (a) The holiday season. The entire distribution shifts to the right (an increase in the expected amount of withdrawals) as individuals spend more. Moreover, the standard deviation decreases as the distribution narrows. (b) Summer vacations. The entire distribution shifts to the right (an increase in the expected amount of withdrawals) as individuals spend more. Moreover, the standard deviation decreases as the distribution narrows. (c) A severe economic recession. The entire distribution shifts to the left and may have a negative mean value as withdrawals average more than deposits. However, as the opportunity cost of holding money declines, some depositors may increase their net deposits. The impact will be to widen the distribution. (d) Double-digit inflation. The entire distribution shifts to the left and may have a negative mean value as withdrawals average more than deposits. Inflation may cause a general flight from money that will cause the distribution to narrow. 6. What are two ways in which a DI can offset the liquidity effects of a net deposit drain of funds? How do the two methods differ? What are the operational benefits and costs of each method? If the bank has a net deposit drain, it needs to either increase its liabilities (by borrowing funds or issuing equity) or reduce its assets. An institution can reduce its assets by drawing down on its cash reserves, selling securities, or calling back (or not renewing) its loans. It can increase liabilities by issuing more federal funds, long-term debt, or new issues of equity. If a bank offsets the drain by increasing liabilities, the size of the firm remains the same. However, if it offsets the drain by reducing its assets, the size of the firm is reduced. If it has a net negative deposit drain, then it needs to follow the opposite strategy. The operational benefit of addressing a net deposit drain is to restore the financial stability and health of the FI. However, this process does not come without costs. On the asset side, liquidating assets may occur only at fire-sale prices that will result in realised losses of value, or asset-mix instability. Further, not renewing loans may result in the loss of profitable relationships that could have negative effects on profitability in the future. On the liability side, entering the borrowed funds market normally requires paying market interest rates that are above those rates that it had been paying on low interest deposits. 7. What are three ways in which an FI can offset the effects of asset-side liquidity risk such as the drawing down of a loan commitment? An FI can use either liability management or reserve adjustment strategies. Liability management involves borrowing funds in the money/purchased funds market. Reserve adjustments involve selling cash-type assets, such as treasury bills, or simply reducing excess cash reserves to the minimum level required to meet regulatory imposed reserve requirements. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 4 8. How are the financing requirements of a DI impacted if the market it serves has an economy that is rapidly growing? How is liquidity risk affected? Contrast your answers with a DI in a contracting economic environment. To serve a rapidly growing economy, the FI might want to maintain a pool of liquid resources to meet loan requests and to take advantage of investment opportunities. Therefore, all else being equal, the financing requirements of an FI in an expanding economy could be expected to be greater than those of an FI in a contracting economy. Similarly, since the economy is in a state of transition, relevant variables (such as withdrawal rates) are more difficult to forecast. Therefore, the FI is exposed to greater liquidity risk. 9. A DI with the following balance sheet (in millions) expects a net deposit drain of $15 million. Assets Liabilities and equity Cash $10 Deposits $68 Loans 50 Equity 7 Securities _15 ___ Total assets $75 Total liabilities and $75 equity Show the DI's balance sheet if the following conditions occur (a) The bank purchases liabilities to offset this expected drain. If the bank purchases liabilities, then the new balance sheet is: Cash $10 Deposits $53 Loans $50 Purchased liabilities $15 Securities $15 Equity $7 (b) The reserve-asset adjustment method is used to meet the liquidity shortfall. If the bank uses reserve-asset adjustment, a possible balance sheet may be: Loans $50 Deposits $53 Securities $10 Equity $7 FIs will most likely use some combination of these two methods. 10. AllStar Bank has the following balance sheet (in millions): Assets Cash Loans Liabilities and equity $ Deposits $110 30 90 Borrowed funds 40 Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 5 Securities Total assets __5 Equity 0 $17 Total liabilities and 0 equity __20 $170 AllStar Bank's largest customer decides to exercise a $15 million loan commitment. How will the new balance sheet appear if AllStar uses the following liquidity risk strategies? (a) Asset management Assets Cash Loans Securities Total assets $30 $105 $35 $170 Liabilities and equity Deposits $110 Borrowed funds $40 Equity $20 Total liabilities and equity $170 When asset management is used to finance the loan commitment the balance sheet total is unchanged, as in part (a), whereas in part (b) liability management causes the balance sheet total to expand. (b) Liability management Assets Cash Loans Securities Total assets Liabilities and equity $30 Deposits $105 Borrowed funds $50 $185 Equity Total liabilities and equity $110 $55 $20 $185 11. A DI has assets of $10 million consisting of $1 million in cash and $9 million in loans. The DI has core deposits of $6 million, subordinated debt of $2 million and equity of $2 million. Increases in interest rates are expected to cause a net drain of $2 million in core deposits over the year. (a) The The average cost of deposits is 6 per cent and the average yield on loans is 8 per cent. FI decides to reduce its loan portfolio to offset this expected decline in deposits. What will be the net effect on interest income and the size of the firm after the implementation of this strategy? Assuming that the decrease in loans is offset by an equal decrease in deposits, the cost of the drain = (0.08 0.06) x $2 million = $40 000. The average size of the firm will be $8 million after the drain. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 6 (b) If the interest cost of issuing new short-term debt is expected to be 7.5 per cent, what would be the effect on net interest income of offsetting the expected deposit drain with an increase in interest-bearing liabilities? Cost of the drain = (0.075 0.06) x $2 million = $30 000. (c) What will be the size of the FI after the drain using this strategy? The average size of the firm will be $10 million after the drain. (d) What dynamic aspects of bank management would further support a strategy of replacing the deposit drain with interest-bearing liabilities? Purchasing interest-bearing liabilities may cost significantly more than the cost rate on deposits that are leaving the bank. However, using interest-bearing deposits protects the bank from decreasing asset size or changing the composition of the asset side of the balance sheet. 12. Define each of the following four measures of liquidity risk. Explain how each measure would be implemented and utilised by a DI. (a) Sources and uses of liquidity This statement identifies the total sources of liquidity as the amount of cash-type assets that can be sold with little price risk and at low cost, the amount of funds the bank can borrow in the money/purchased funds market, and any excess cash reserves over the necessary reserve requirements. The statement also identifies the amount of each category the bank has utilised. The difference is the amount of liquidity available for the bank. This amount can be tracked on a dayto-day basis. (b) Peer group ratio comparisons Banks can easily compare their liquidity with peer group banks by looking at several easy to calculate ratios. High levels of loan to deposit and borrowed funds to total asset ratios will identify reliance on borrowed funds markets, while heavy amounts of loan commitments to assets may reflect a heavy amount of potential liquidity need in the future. (c) Liquidity index The liquidity index measures the amount of potential losses suffered by an FI from a fire-sale of assets compared to a fair market value established under the conditions of normal sale. The lower the index, the less liquidity the FI has on its balance sheet. The index should always be a value between 0 and 1. (d) Financing gap and financing requirement Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 7 The financing gap can be defined as average loans minus average deposits or, alternatively, as negative liquid assets plus borrowed funds. A negative financing gap implies that the bank must borrow funds or rely on liquid assets to fund the bank. Thus the financing requirement can be expressed as financing gap plus liquid assets. This relationship implies that some level of loans and core deposits as well as some amount of liquid assets determine the need for the bank to borrow or purchase funds. 13. A DI has $10 million in T-bills, a $5 million line of credit to borrow in the repo market, and $5 million in excess cash reserves (above reserve requirements). The DI currently has borrowed $6 million in central bank funds and $2 million from the central bank rediscounting facility to meet seasonal demands. (a) What is the bank's total available (sources of) liquidity? The bank's available resources for liquidity purposes are $10 + $5 + $5 = $20 million. (b) What is the bank's current total uses of liquidity? The bank's current use of liquidity is $6 + $2 = $8 million. (c) What is the net liquidity of the bank? The bank's net liquidity is $12 million. (d) What conclusions can you derive from the result? The net liquidity of $12 million suggests that it can withstand unexpected withdrawals of $12 million without having to reduce its less liquid assets at fire-sale prices. 14. A DI has the following assets in its portfolio: $20 million in cash reserves with the Central Bank, $20 million in T-bills, $50 million in mortgage loans, and $10 million in fixed assets. If the assets need to be liquidated at short notice, the DI will receive only 99 per cent of the fair market value of the T-bills and 90 per cent of the fair market value of the mortgage loans. Estimate the liquidity index for these securities using the above information. I = wi Pi * Pi i n where wi = weights of the portfolio, Pi = fire-sale prices, Pi* = fair market value of assets Thus, and assuming that fixed assets will not be disposed on short notice: I = (20/100)(1.00/1.00) + (20/100)(0.99/1.00) + (50/100)(0.90/1.00) (10/100)(1/1.00) Instructor's + Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 8 = 0.848 15. Conglomerate Corporation has acquired Acme Corporation. To help finance the takeover, Conglomerate will liquidate the overfunded portion of Acme's pension fund. The face values and current and one-year future liquidation values of the assets that will be liquidated are given below. Liquidation values Asset Face value IBM stock $10 000 GE bonds 5 000 Treasury securities 15 000 t=0 $ 9 900 4 000 13 000 t=1 $10 500 4 500 14 000 Calculate the one-year liquidity index for these securities. n I = wi Pi where wi = weights of the portfolio, * Pi i Pi = fire-sale prices, Pi* = fair market value of assets Thus I = (0.333)(9900/10 500) + (0.167)(400/4500) + (0.5)(13 000/14 000) = 0.927 16. Plainbank has $10 million in cash and equivalents, $30 million in loans, and $15 million in core deposits. (a) Calculate the financing gap. Financing gap = average loans average deposits = $30 million - $15 million = $15 million. (b) What is the financing requirement? Financing requirement = financing gap + liquid assets = $15 million + $10 million = $25 million. (c) How can the financing gap be used in the day-to-day liquidity management of the bank? A rising financing gap on a daily basis over a period of time may indicate future liquidity problems due to increased deposit withdrawals and/or increased exercise of loan commitments. Sophisticated lenders in the money markets may be concerned about these trends, and they may react by imposing higher risk premiums for borrowed funds or stricter credit limits on the amount of funds lent. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 9 17. Consider the following bank balance sheet: (in millions) Assets Liquid assets $20 Loans $2,550 Property $330 Liabilities Deposits $1,800 Borrowed funds xx Equity $150 (a) If stable core deposits are 90 per cent of total deposits, what is the bank's financing gap? Core deposits are 0.90 (1800) = $1620 million. The financing gap is $2550 - $1620 = $930 million. (b) What is the amount of borrowed funds that the bank must have to meet its financing requirements? The bank's financing requirements are: $930 + $20 = $950 million. Therefore, if the bank is meeting its financing requirements, it must obtain at least $950 million in borrowed funds. (c) If stable core deposits are only 40 per cent of total deposits, how do your answers to (a) and (b) change? How is the liquidity risk exposure of the bank affected? Core deposits are 0.40 ($1800m) = $720 million. The financing gap is $2550 - $720 = $1830m. The bank's financing requirements are: financing gap + liquid assets = $1830m + $20m = $1850m. Since borrowed liabilities are only $950 million, this bank has a liquidity shortfall. 18. How can an FI's liquidity plan help reduce the effects of liquidity shortages? What are the components of a liquidity plan? A liquidity plan requires forward planning so that an optimal mix of funding can be implemented to reduce costs and unforeseen withdrawals. In general, a plan could incorporate the following: (a) (b) (c) (d) (e) Assigning a team that will take charge in the event of a liquidity crisis. Identifying the account holders that will most likely withdraw funds in the event of a crisis. Estimating the size of the run-offs and the sources of borrowing to stem the run-offs. Establishing maximum limits for borrowing by subsidiaries and affiliates, including inter-affiliate loans, and the maximum risk premium to be paid during crisis borrowing. Specifying the sequencing of asset disposal in the event of a crisis. Planning will ensure an orderly procedure to stem the rush of withdrawals and avert a total breakdown during a crisis. This is very important for firms that rely on deposits or short-term funds as a source of borrowing because of the difficulty in rolling over debt in periods of crisis. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 10 19. What is a bank run? What are some possible withdrawal shocks that could initiate a bank run? What feature of the demand deposit contract provides deposit withdrawal momentum that can result in a bank run? A bank run is an unexpected increase in deposit withdrawals from a bank. Bank runs can be triggered by several economic events including (a) concerns about solvency relative to other banks, (b) failure of related banks, and (c) sudden changes in investor preferences regarding the holding of non-bank financial assets. The first come, first serve (full pay or no pay) nature of a demand deposit contract encourages priority positions in any line for payment of deposit accounts. Thus, even though money may not be needed, customers have an incentive to withdraw their funds. 20. The following is the balance sheet of a DI in millions: Assets Cash Loans Plant equipment Total and Liabilities and equity $ Demand $50 2 deposits 50 __ Equity ___5 3 $55 Total $55 The asset-liability management committee has estimated that the loans, whose average interest rate is 6 per cent and whose average life is three years, will have to be discounted at 10 per cent if they are to be sold in less than two days. If they can be sold in four days, they will have to be discounted at 8 per cent. If they can be sold later than a week, the DI will receive the full market value. Loans are not amortised, that is the principal is paid at maturity. (a) What will be the price received by the FI for the loans if they have to be sold in (i) two days and (ii) in four days? (i) Price of loan = PVAn=3,k=10(3) + PVn=3, k=10(50) = $45.03 if sold in two days. (ii) Price of loan = PVAn=3,k=8(3) + PVn=3, k=8(50) = $47.42 if sold in four days. (b) In a crisis, if depositors all demand payment on the first day, what amount will they receive? What will they receive if they demand to be paid within the week? Assume no deposit insurance. If depositors demand to withdraw all their money on the first day, the bank will have to dispose of its loans at fire-sale prices of $45.03 million. With its $2 million in cash, it will be able to pay depositors on a first-come basis until $47.03 million has been withdrawn. The rest will have to wait until liquidation to share the remaining proceeds. Similarly, if the run takes place over a five-day period, the bank may have more time to dispose of its assets. This could generate $47.42 million. With its $2 million in cash it would be able to satisfy on a first-come basis withdrawals up to $49.42 million. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 11 21. What government safeguards are in place to reduce liquidity risk for DIs? In the US, deposit insurance and the discount window both help in the event of a liquidity drain and both help to prevent liquidity drains from occurring. In Australia, the role of overseeing the Australian financial system stability and the operation of the Payments System has been allocated to the Reserve Bank of Australia (RBA), whilst regulatory requirements for liquidity have been assigned to the Australian Prudential Regulatory Authority (APRA)--see further discussion of specified liquidity requirements in Chapter 16; in particular, that liquidity requirements must be sufficient for the `goingconcern scenario' and the `bank-specific-crisis scenario'. The RBA, similar to other central banks, provides facilities that assist DIs with short-term non-permanent liquidity needs. The rediscount facility (similar to the US discount window) allows DIs to access funds from the central bank by selling discounted T-notes at a further discount (re-discount) back to the central bank. This access to liquidity comes at the high cost of the re-discount rate. A second liquidity mechanism is the repurchase agreement facility, which allows DIs to sell T-notes to the central bank to access short-term liquidity, but with a contract that specifies that the DI must purchase the T-notes back (repurchase) at a specified date and price. 22. What are the first, second and third levels of defence against liquidity risk for a life insurance company? How does liquidity risk for a property-casualty insurer differ from that for a life insurance company? The initial defence is the amount of premium income and returns on the asset portfolio. As additional policies are surrendered, the insurance company may need to sell some relatively liquid assets such as government bonds. In the case of extreme liquidity pressures, the company may need to begin to liquidate less-liquid assets in the portfolio, possibly at distressed prices. Property-casualty insurance covers short-term contingencies, and thus the assets of PC insurers generally are more short term than for life insurance companies, and the policy premium adjustments come at shorter intervals. As a result, although the degree and timing of contingency payout is more uncertain for PC companies, the flexibility to deal with liquidity pressures is better. 23. How is the liquidity problem faced by managed funds different from that faced by DIs and insurance companies? How does the liquidity risk of an open-end mutual fund compare with that of a closed-end fund? In the case of a liquidity crisis in banks and insurance firms, there are incentives for depositors and policyholders to withdraw their money or cash in their policies as early as possible. Latecomers will be penalised because the financial institution may be out of liquid assets. They will have to wait until the institution sells its assets at fire-sale prices, resulting in a lower payout. In the case of managed funds, the net asset value for all shareholders is lowered or raised as the market value of assets change, so that everybody will receive the same price if they decide to withdraw their funds. Hence, the incentive to engage in a run is minimised. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 12 Closed-end funds are traded directly on stock exchanges, and therefore little liquidity risk exists since any fund owner can sell the shares on the exchange. An open-end fund is exposed to more risk since those shares are sold back to the fund, which must provide cash to the seller. 24. A managed fund has the following assets in its portfolio: $40 million in fixed-income securities and $40 million in stocks at current market values. In the event of a liquidity crisis, the fund can sell the assets at 96 per cent of market value if they are disposed of in two days. The fund will receive 98 per cent if the assets are disposed of in four days. Two shareholders, A and B, own 5 per cent and 7 per cent of equity (shares), respectively. Value of fixed-income securities if sold in two days Value of stocks if sold in two days Total $40 x 0.96 = $38.4 $40 x 0.96 = $38.4 $76.8 (a) Market uncertainty has caused shareholders to sell their shares back to the fund. What will the two shareholders receive if the managed fund must sell all the assets in two days? In four days? Shareholder A will receive $76.8 x 0.05 = $3.84 down from the current value of $4.00. Shareholder B will receive $76.8 x 0.07 = $5.376 down from the current value of $5.60. Value of fixed-income securities if sold in four days $40 x 0.98 = $39.2 Value of stocks if sold in two days $40 x 0.98 = $39.2 Total $78.4 Shareholder A will receive $78.4 x 0.05 = $3.92 down from the current value of $4.00. Shareholder B will receive $78.4 x 0.07 = $5.488 down from the current value of $5.60. (b) How does this situation differ from a bank run? How have bank regulators mitigated the problem of bank runs? This differs from a run on a bank in that the claimants of the assets all receive the same amount, as a percentage of their investments. In the case of bank runs, the first to withdraw receive the full amount, leaving the likelihood that some depositors may not receive any money at all. One way of mitigating this problem is for regulators to offer deposit insurance such as that provided by the Federal Deposit Insurance Commission (FDIC) in the US. This reduces the incentive to engage in runs. In Australia, the APRA-specified liquidity requirements (see Question 21 above, and Chapter 16) are expected to provide sufficient liquidity to meet a bank-specific crisis. The Australian government does not have a `too-big-to-fail' policy; however, it is interesting to speculate on the government response should one of the major Australian banks fail. Whilst no private Australian bank has failed for over one hundred years, the Victorian state government response to a significant building society failure in 1990 is perhaps indicative of what may occur. In that instance, the state government imposed a three-cent per litre petrol tax to help pay depositors out. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 13 25. A managed fund has $1 million in cash and $9 million invested in securities. It currently has one million shares outstanding. (a) What is the net asset value (NAV) of this fund? NAV = Market value of shares/number of shares = $10m/1m = $10 per share (b) Assume that some of the shareholders decide to cash in their shares of the fund. How many shares at its current NAV can the fund take back without resorting to a sale of assets? At the current NAV, it can absorb up to $1 million, or 100 000 shares. (c) As a result of anticipated heavy withdrawals, the fund sells 10 000 shares of IBM stock currently valued at $40. Unfortunately, it receives only $35 per share. What is the net asset value after the sale? What are the cash assets of the fund after the sale? Its loss by selling 10 000 shares of IBM at $35 instead of $40 = -$5 x 10 000 = -$50 000. New NAV = $9 950 000 /1m = $9.95 Cash = $1 million + $350 000 = $1.35 million and 9.60 million in securities. (d) Assume that after the sale of IBM shares, 100 000 shares are sold back to the fund. What is the current NAV? Is there a need to sell more securities to meet this redemption? If 100 000 shares are redeemed, it needs to pay $9.95 x 100 000 = 995 000. Its NAV will remain the same, i.e. $8 955 000/900 000 = $9.95. No, it does not need to sell any extra shares since it has $1.35 million in cash. WEB QUESTION 26. Go to the Reserve Bank of Australia's web site and update Table 15.1 from Tables B02 and B03 (Banks assets and liabilities). Students to complete. The answer will depend on the date of the assignment. The web site is http://www.rba.gov.au. Go to the RBA home page and click on `Statistics'. Click on `Bulletin Statistical Tables'. Click on `Banks Assets - B2' and `Banks Liabilities - B3'. This will bring the files that contain the relevant data onto your computer and allow you to download and open the Excel files B02 and B03 tables to find the latest available reported data on Australian banks' assets and liabilities. Instructor's Resource Manual t/a Financial Institutions Management 2e by Lange, Saunders, Anderson, Thomson & Cornett 14 ... 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