Are you sure you know what you're talking about?! 1. RWA cannot be more than 100% of assets - with cash and certain govies around 0%. 2. Your definition of Tier 1 Capital is kind of fishy - you need to back out goodwill. 3. Or are you talking about Tier 1 Common (seems like you use them interchangeably) - then back out preferred and goodwill, otherwise it's incorrect.
I have gone through many of your videos and am so impressed. I work in a banks's IT department but working with highligh complex types of business lines and risk mangement areas. You made all the concepts I have been struggling with so easily understood (amazing video on repo). One question though --- why are the derivatives consider part of the off balance sheet? I always accpted it as the fact but just curious.
@jeremyj2e the point is the *stylized* example is to emphasis that off-BS assets do contribute to RWA, not to size them realistically (obviously). I didn't drill down to intangibles (obviously). Liabilities at 6x equity is not misleading: it's a bank, they are leveraged. But thank you for the useless nitpicks
Thank you for your simplified and clear explanation. Does this calculation applies to banks in Europe. I want to know if the same approach is used by Italian banks.
it's tempting to treat provision or loan loss reserve as asset whereas it in fact is a way of absorbing a loss, a way of financing, just like equity. it's a form of capital. it's not a part of the assets of a bank.
yes, thank you for the reply. I understand, whatever form it is in, as long as it's effectively a way of "financing", it should be accounted/treated as capital, just like equity.
The Fed Emergency Supplementary Leverage Ratio expiring sent me here
Are you sure you know what you're talking about?!
1. RWA cannot be more than 100% of assets - with cash and certain govies around 0%.
2. Your definition of Tier 1 Capital is kind of fishy - you need to back out goodwill.
3. Or are you talking about Tier 1 Common (seems like you use them interchangeably) - then back out preferred and goodwill, otherwise it's incorrect.
FYRMhater re 1 includes off-bs items as well
It is pretty obvious he has no clue what he is talking about, b.s. from a-z so to speak.
I have gone through many of your videos and am so impressed. I work in a banks's IT department but working with highligh complex types of business lines and risk mangement areas. You made all the concepts I have been struggling with so easily understood (amazing video on repo).
One question though --- why are the derivatives consider part of the off balance sheet? I always accpted it as the fact but just curious.
I was under the impression that reserves were also part of tier2 capital. Is is not true?
@jeremyj2e the point is the *stylized* example is to emphasis that off-BS assets do contribute to RWA, not to size them realistically (obviously). I didn't drill down to intangibles (obviously). Liabilities at 6x equity is not misleading: it's a bank, they are leveraged. But thank you for the useless nitpicks
Thank you for your simplified and clear explanation.
Does this calculation applies to banks in Europe. I want to know if the same approach is used by Italian banks.
thank you, I wish there was an excel attachment of the calculatıon in the video
@bionicturtledotcom ... and the liabilities i am showing are on-balance sheet, so your 6x doesn't apply to my stylized example anyway
So basically MacDonough ratio is total capital / (total asset *risk multiplier)?
In this case, how exactly is the RWA calculated? Because I couldn't get to see what value D19 was.
i realize I am kinda off topic but do anyone know a good website to watch newly released movies online?
@Cesar Axl flixportal xD
@Cristian Easton Thanks, I went there and it seems like they got a lot of movies there :) Appreciate it!!
@Cesar Axl Glad I could help =)
@o266242 Thrilled to help, thanks for you kind words!
Thank you very much. the explanation is very clear.
Mike Lam You're welcome! Thank you for watching!
thanks for wonderful video
regards
anoop mohanty...
this is amazing, thank you so much. would you happen to have one for an insurance company? or maybe be willing to do one? :-0
here debt + loan = 400 ... not 550 ... am i missing something?
it's tempting to treat provision or loan loss reserve as asset whereas it in fact is a way of absorbing a loss, a way of financing, just like equity. it's a form of capital. it's not a part of the assets of a bank.
Its a 'liability' in the sense that it was deducted from the 'Gross Loans' figure...
yes, thank you for the reply. I understand, whatever form it is in, as long as it's effectively a way of "financing", it should be accounted/treated as capital, just like equity.
@@lizi9019 Loans loss provisions are treated as Tier 2 cap
Thank you for your explanation - nice and simple.
+William Hwang You're welcome! We are happy to hear that our video was so helpful! Thanks for watching!
This is so helpful. Thanks
nice video
this is great. thank you.
EXCELLENT
Concise explanation
Thank you for watching!