A bank has capital to risk-weighted assets of 11.5%,Tier 1 capital to risk-weighted assets of 7.2% and a leverage ratio of 5.8%.What type of bank is this?

Question

Quizplus · Accepted Answer

To be considered well capitalized according to regulatory guidelines, a bank must have a capital to risk-weighted assets ratio of at least 10%, a Tier 1 capital to risk-weighted assets ratio of at least 6%, and a leverage ratio of at least 5%.

In this case, the bank's ratios are all above the regulatory guidelines for being well capitalized, with a capital to risk-weighted assets ratio of 11.5%, a Tier 1 capital to risk-weighted assets ratio of 7.2%, and a leverage ratio of 5.8%. Therefore, the bank is well capitalized.

A Bank Has Capital to Risk-Weighted Assets of 11