Answer – Matching Liquidity Ratios of Banks
This is the answer for Quiz – Matching Liquidity Ratios of Banks.
| Liquid Assets* / Total Assets | Loans / Deposits | Customer Deposits / Total Assets | Bank | |
| A | 57% | N/A | N/A | Goldman Sachs |
| B | 16% | 70% | 84% | Bank of India |
| C | 20% | 84% | 77% | Wells Fargo |
| D | 16% | 112% | 51% | BBVA |
| E | 61% | 30% | 63% | Rothschild Bank |
A Investment bank
- High levels of liquid assets, due to trading activities
- No loans and very limited deposits due to limited commercial banking operations
B Emerging market bank
- Dominant position in deposit-taking market
- typical conservative loan/deposit ratio
- Typical liquid asset ratio
C US retail bank
- Aggressive lending policies in US market (credit cards, mortgages etc.)
- Strong customer deposit base due to nature of business and high rating
- Very limited trading activities
- Liquidity maintained only to meet prudent management and regulations
D Spanish commercial bank
- Reasonable level of liquidity
- High loan/deposit ratio due to presence of Caja’s dominance in retail deposits and resources to wholesale funding
E Swiss private bank, with business focussed on high net worth individuals
- Focus on true liquidity as opposed to trading activities
- Low level of loans due to client base (high net worth individuals have no need for loans)
- Relatively strong deposit base from rich depositors in Switzerland (seen as safe haven)
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