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Monday, 25 February 2013

Write Down in Mortgage

Part A
Balance sheet before expense in mortgage
Liabilities| £m| Assets| £m| endangerment Weighting| Risk modify Assets (£m)|
Deposits|  | Cash|  | | |
Current accounts| 195| Cash in Tills| 5| (0%)| 0|
Time deposits| 94| Money at speak| 5| (0%)| 0|
 |  |  |  |  | |
add Liabilities| 289| Available for sale assets|  | |
 |  | Gove Bonds & Bills| 10| (10%)| 1|
 |  | Other Bonds & Bills| 40| (20%)| 8|
cornerstonedour|  |  |  |  | |
Shargonholder majuscule| 13| Other assets|  |  | |
Retained pelf| 3| Loans and Advances| 125| (100%)| 125|
 |  | Mortgages| 120| (50%)| 60|
numerate Equity| 16|  |  |  | |
 |  |  |  |  | |
Total Liabilities + Equity| 305| Total Assets| 305| Total Risk Adj| 194|
UK Liquidity Ratio| 3.28%|
Leverage Ratio| 5.25%|
Capital Ratio| 8.25%|
The pious platitude has 3 sections, asset, liability and equity. The bank borrows bills from people that have extra funds, known as savings(liability of the bank). Then, the bank uses the deposits from savers to lend out money to people that indigences to borrow money(asset of the bank). Anybody can save or get a loan, be it an individual, government, or any organisations.

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The bank can use the depositors money to forget out loans and buy assets, but there are risks involved. If the loans are uncollectable or the assets are written-down, the bank would have to pay buns to the savers because the bank is the one that should bear the losses. To pay for losses, the bank requires around equity capital, consisting of the bank owners money.
Balance sheet after £6m write-down in mortgage
Liabilities| £m| Assets| £m| Risk Weighting| Risk Adjusted Assets (£m)|
Deposits|  | Cash|  | | |
Current accounts| 195| Cash in Tills| 5| (0%)| 0|
Time deposits| 94| Money at call| 5| (0%)| 0|
 |  |  |  |  | |
Total Liabilities| 289| Available for sale assets|  | |
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