CQIB FINAL EXAM ACTUAL QUESTIONS AND ANSWERS
RATED A+
✔✔Liabilities of a Bank - ✔✔Interest Bearing Liabilities
-Transaction deposits
-Savings deposits
-Investment deposits
-Other demand deposits
-Debt issues
Equity-
Share Capital
✔✔Basel III liquidity reforms - ✔✔The Basel III liquidity reforms involve two new
quantitative measures ― a 30-day Liquidity Coverage Ratio (LCR) to address an acute
stress scenario and a Net Stable Funding Ratio (NSFR) to encourage longer-term
funding resilience.
✔✔Liquidity Coverage Ratio (LCR) - ✔✔Requires Australian ADIs to
hold sufficient liquid assets to
meet 30 day net cash outflows
projected under an APRA prescribed stress scenario
✔✔Net Stable Funding Ratio (NSFR) - ✔✔Will require Australian ADIs
to fund their assets with
sufficient stable funding
to reduce funding risk
over a one-year horizon as
prescribed by APRA.
✔✔Capital Adequacy Requirements - ✔✔A bank's capital, in its simplest form,
represents its ability to withstand losses without becoming insolvent and managing risk.
The Australian Prudential Regulation Authority (APRA) makes and enforces the rules
which govern the capital adequacy of Australian banks.
✔✔Tier 1 capital - ✔✔includes ordinary shares and retained earnings (profits not
dispersed to shareholders);
can also include specific types of preference shares and convertible securities.
✔✔Tier 2 capital - ✔✔sources that rank below a bank's depositors and other senior
creditors, i.e. subordinated debt; provides depositors with an additional layer of loss
protection after a bank's Tier 1 capital is exhausted.
✔✔Banking History - ✔✔1817 - First bank of Aus (Bank of NSW)
, 1893 - Aust banking crisis (little gov control/regulation => led to failure of 11 commercial
banks)
1911 - Gov established CBA.
1930s - Great depression (@ end banking had become tightly regulated)
1960 - RBA was created (performed central bank functions previously done by CBA)
1981 - Campbell Committee of enquiry into Australian financial system)
1990-2000 - "four pillars policy"
2017 - The Better Banking Program
✔✔Four Pillars Policy - ✔✔Rejecting the merger between the big four banks, to avoid
further concentration of major banks.
✔✔Building Societies - ✔✔A building society is a type of financial institution that
provides banking and other financial services to its members.
✔✔Credit Unions - ✔✔Like building societies, credit unions are also mutually-owned
institutions, providing basic, low
cost deposit, personal/housing loans and payment services to members.
✔✔PRIMARY MARKETS - ✔✔Where new issues of shares or other forms of security
are offered to the market for the first time.
✔✔SECONDARY MARKETS - ✔✔Where these securities are traded after their initial
issue, like a
"second hand" market, where securities that have already been
issued through the primary market are traded again.
✔✔EXCHANGE TRADED MARKETS - ✔✔Are organised and subsequently traded on a
physical or
electronic exchange facility, typically with business rules that
define relationships, products and conventions. In Australia
the main licensed exchange traded markets are equities and
exchange traded derivatives on the ASX.
✔✔OVER THE COUNTER MARKETS (OTC) - ✔✔Non-standardised and negotiated
between the parties involved in the transaction
✔✔Microeconomics - ✔✔Supply and demand and other forces that may impact the
price levels in the economy.
Taxes and regulation created by
governments.
✔✔Macroeconomics - ✔✔• Unemployment rates
• Gross domestic product (GDP)
RATED A+
✔✔Liabilities of a Bank - ✔✔Interest Bearing Liabilities
-Transaction deposits
-Savings deposits
-Investment deposits
-Other demand deposits
-Debt issues
Equity-
Share Capital
✔✔Basel III liquidity reforms - ✔✔The Basel III liquidity reforms involve two new
quantitative measures ― a 30-day Liquidity Coverage Ratio (LCR) to address an acute
stress scenario and a Net Stable Funding Ratio (NSFR) to encourage longer-term
funding resilience.
✔✔Liquidity Coverage Ratio (LCR) - ✔✔Requires Australian ADIs to
hold sufficient liquid assets to
meet 30 day net cash outflows
projected under an APRA prescribed stress scenario
✔✔Net Stable Funding Ratio (NSFR) - ✔✔Will require Australian ADIs
to fund their assets with
sufficient stable funding
to reduce funding risk
over a one-year horizon as
prescribed by APRA.
✔✔Capital Adequacy Requirements - ✔✔A bank's capital, in its simplest form,
represents its ability to withstand losses without becoming insolvent and managing risk.
The Australian Prudential Regulation Authority (APRA) makes and enforces the rules
which govern the capital adequacy of Australian banks.
✔✔Tier 1 capital - ✔✔includes ordinary shares and retained earnings (profits not
dispersed to shareholders);
can also include specific types of preference shares and convertible securities.
✔✔Tier 2 capital - ✔✔sources that rank below a bank's depositors and other senior
creditors, i.e. subordinated debt; provides depositors with an additional layer of loss
protection after a bank's Tier 1 capital is exhausted.
✔✔Banking History - ✔✔1817 - First bank of Aus (Bank of NSW)
, 1893 - Aust banking crisis (little gov control/regulation => led to failure of 11 commercial
banks)
1911 - Gov established CBA.
1930s - Great depression (@ end banking had become tightly regulated)
1960 - RBA was created (performed central bank functions previously done by CBA)
1981 - Campbell Committee of enquiry into Australian financial system)
1990-2000 - "four pillars policy"
2017 - The Better Banking Program
✔✔Four Pillars Policy - ✔✔Rejecting the merger between the big four banks, to avoid
further concentration of major banks.
✔✔Building Societies - ✔✔A building society is a type of financial institution that
provides banking and other financial services to its members.
✔✔Credit Unions - ✔✔Like building societies, credit unions are also mutually-owned
institutions, providing basic, low
cost deposit, personal/housing loans and payment services to members.
✔✔PRIMARY MARKETS - ✔✔Where new issues of shares or other forms of security
are offered to the market for the first time.
✔✔SECONDARY MARKETS - ✔✔Where these securities are traded after their initial
issue, like a
"second hand" market, where securities that have already been
issued through the primary market are traded again.
✔✔EXCHANGE TRADED MARKETS - ✔✔Are organised and subsequently traded on a
physical or
electronic exchange facility, typically with business rules that
define relationships, products and conventions. In Australia
the main licensed exchange traded markets are equities and
exchange traded derivatives on the ASX.
✔✔OVER THE COUNTER MARKETS (OTC) - ✔✔Non-standardised and negotiated
between the parties involved in the transaction
✔✔Microeconomics - ✔✔Supply and demand and other forces that may impact the
price levels in the economy.
Taxes and regulation created by
governments.
✔✔Macroeconomics - ✔✔• Unemployment rates
• Gross domestic product (GDP)
