Exam (elaborations)
RSK4804 Exam pack 2024(Questions and answers)
- Course
- RSK4804
- Institution
- University Of South Africa
RSK4804 Exam pack 2024(Questions and answers)
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RSK4804 EXAM PACK 2024QUESTIONS AND ANSWERS
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EMAIL:gabrielmusyoka940@gmail.com
, lOMoARcPSD|46589353
RSK4804
Unisa Winnie Mandela Building
24 January 2021
S. Molefe/M. Khumalo
Exam prep
class
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Capital adequacy requirements
• The capital adequacy of South African banks is measured in terms of the
requirements of the SARB. The ratio is calculated by the aggregate amount of
qualifying capital and reserve funds dividend by RWA. The base minimum South
African total capital adequacy ratio for banks is 10% of RWA. Non-South African
banks in the Group have similar capital adequacy methodology requirements. In
SA, banks that do not meet the required minimum capital-adequacy ratio of 10 per
cent must have in place phase-in programmes, which have been approved by the
Registrar.
• RWA: Assets in balance sheet of a bank are assigned different risks under Basel 1,
based on their inherent risk. Government and central bank obligations carry nil
(0%) risk, while private sector carry full risk (100%).
• However, the existence of adequate capital does not provide a guarantee against
the failure of a bank that is badly managed.
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Capital Adequacy requirement
Saamtrek Bank has R140m in assets composed of R50m in government
loans, R30m in mortgage loans, R45m in corporate loans and R15m in
investments. The corresponding risk weights defined by the entity are 0% for
government, 45% for mortgage loans, 100% for corporate and 25% for
investments. Based on these assets, what would be the bank’s capital
adequacy requirements?
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