Bank Capital Ratios: Risk-Weighted Assets, CET1, Buffers & Leverage

What you'll build

What you will be able to do

Each lab ends with a concrete result that you build yourself and the checker confirms, cell by cell.

• Look up the risk weight for each of Northmere's ten exposure classes, turn exposures into risk-weighted assets, total them and measure the RWA density.
• Convert Northmere's credit lines, commitments, letters of credit and guarantees into exposures with credit conversion factors, risk-weight them and add them to credit RWA.
• Build Northmere's CET1 from its equity items, take off the regulatory deductions, add AT1 for Tier 1 and cap the general provisions to get total capital.
• Total Northmere's RWA across credit, market and operational risk, calculate the three capital ratios, the surplus over each minimum and how much RWA the bank could add before the first minimum binds.
• Calculate Northmere's bank-specific countercyclical buffer, stack the combined buffer requirement, measure the distance to the MDA trigger in four scenarios and look up how much of its profit the bank could still pay out.
• Build Northmere's leverage exposure measure from on-balance assets, derivatives, repos and off-balance items, divide Tier 1 by it and find how much the balance sheet could still grow.
• Project Northmere's RWA and CET1 for three years, find the weakest CET1 ratio in the plan and solve for the highest dividend payout in 2029 that keeps the bank on its target.
• Run Northmere through a three-year adverse scenario, track CET1 and the CET1 ratio, find the trough and the depletion, and chart the ratio against the MDA trigger.