Back To Bank Balance Sheets

Back To Bank Balance Sheets - represent 28.1% of assets,...

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Back To Bank Balance Sheets 1 Banks are highly leveraged (equity is only 11% of total assets). TARP and the Basel Accords addressed capital inadequacy.
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Commercial Bank Leverage The 3Q11 U.S. bank leverage ratio is 11.3%. Bank of America was 10% at 12/31/10. To strengthens bank capital, the Basel Committee on Bank Supervision agreed on new, global capital and liquidity requirements (implementation begins in 2013). 2 FDIC Graph Book
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The Balance Sheet - Assets 3 Loans represent 53.4% of assets, giving rise to significant credit risk . Since banks are highly leveraged, a small number of loan defaults can decimate a bank.
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The Balance Sheet - Assets 4 Investments
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Unformatted text preview: represent 28.1% of assets, giving rise to significant market risk . Since banks are highly leveraged, a material change in the value of the book is significant. The Balance Sheet - Liabilities 5 Banks fund assets with customer deposits (78%) and borrowed funds (17%). Liabilities have shorter maturities than assets. This mismatched maturity structure gives rise to interest rate risk . The Balance Sheet - OBS In addition to the accounts on the balance sheet, banks have a number of off-balance sheet items (OBS) that contribute significant incremental fee income, but also pose significant OBS risk . 6...
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This note was uploaded on 01/26/2012 for the course FIN 4620 taught by Professor Patriciarobertson during the Spring '12 term at Kennesaw.

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Back To Bank Balance Sheets - represent 28.1% of assets,...

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