Risk-Weighted Assets

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Risk-Weighted Assets

The reserve requirements for a bank, weighted according to risk. Risk-weighted assets are the capital a bank must keep to cover its liabilities. They are calculated as follows: Government bonds have a risk weight of 0% while all other assets have a risk weight of 100%. One calculates the units of each type of asset a bank carries to find how risky its assets are.
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Under Basel III, analysis of eligible capital and deductions are fully embedded during the risk weighted asset calculation, which represents a significant change from Basel II.
The risk weighted asset ratio, CRAR (capital to risks assets ratio), and the core CRAR were at 13.5 percent and 9.6 percent, which are well above the 9 percent and 6 percent recommended by BASEL, he said.
ANZ estimates that these changes will result in an increase in risk weighted assets, equivalent to approximately 15 basis points of CET1 capital.
Deutsche Bank (DB) has announced that as part of its "ongoing commitment to improve long-term profitability and returns to shareholders," its board is making a series of measures to restructure the bank's operations, including the exit of Deutsche's Global Equities and a reduction in corporate and investment banking risk weighted assets. Deutsche Bank will exit its Equities Sales & Trading business, while retaining a focused equity capital markets operation.
ROYAL Bank of Scotland shares jumped early yesterday after the bank said a merger between two Saudi banks would boost its capital and reduce its risk weighted assets by PS4.7bn.
The bank said that as a result of the merger completion on Sunday, the NatWest Markets unit would recognise an income gain on the disposal of the Alawwal bank stake for shares in Saudi British Bank of GBP400 million and a reduction in risk weighted assets of GBP4.7 billion.
"Given the changing business dynamics and the risk weighted assets, Doha bank has optimally allocated the capital to deliver higher returns," said Doha Bank group chief executive Dr R Seetharaman, receiving the award from Ewald ME-ller, Managing Director, Supervision and Authorisation, Qatar Financial Centre Regulatory Authority.
On Friday, the bank said that it would tighten rules on how banks calculate risk weighted assets, a move aimed at reducing risks in the financial system.
GBP 293m and a reduction in risk weighted assets currently attributable to the securitised mortgages of c.GBP 97m.
The bank said it will continue to recycle risk weighted assets released from the deleveraged 'non-core' portfolios to support growth of 'core' activities, whilst ensuring UAB captures all available cross-sales opportunities.
With regard to capital adequacy, the CBE revealed that the capital base to risk weighted assets declined to 13.8% in June from 14% in March.
The sale involved the a total of "1.142.052,6400 founder shares and 765.096,0464 US dollar A shares," the lender said in an emailed statement today adding that the transaction had a 0.1 per cent positive impact on its common equity tier 1 capital resulting from a reduction of its risk weighted assets.