easy · Corporate Credit Analysis
A bank analyst is calculating the CET1 ratio for "TrustBank". The bank has $12B in Common Equity Tier 1 capital and $150B in total Risk-Weighted Assets (RWA).
What is the CET1 ratio, and how does it compare to a typical regulatory minimum of 4.5%?
- 1.2%; it is well below the regulatory minimum and indicates insolvency.
- 4.5%; it exactly meets the regulatory minimum.
- 8.0%; it is comfortably above the regulatory minimum.
- 12.5%; it is significantly above the regulatory minimum.
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