Quiz – Matching Liquidity Ratios of Banks


Understanding the key drivers of liquidity is critical to analysing a bank of any financial institution. A bank’s access to liquidity is important in the daily running of the business and can become vital in terms of crises, either in terms of the individual bank or during a sector wide banking crisis (as have been experienced in Russia, Turkey, Argentina, Ireland and Greece amongst others). A bank’s access to liquidity is particularly important for investment banks due to the fact that they have no access to stable customer deposits as a form of funding. This quiz is designed to demonstrate the differences, which can arise in the liquidity ratios between difference financial institutions and different countries.

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The table below shows two liquidity ratios (Liquid Assets / Total Assets and Net Loans / Customer Deposits) and one useful funding ratio (Customer Deposits / Total Assets).

Please match the institution with the ratio and give an explanation as to your results.

Liquid Assets* / Total AssetsLoans / DepositsCustomer Deposits / Total AssetsBank (1, 2, 3, 4, 5)

*Liquid assets = cash and cash equivalents, reverse repos and Fed Funds and government securities

  1. Wells Fargo: AA-rated US retail bank
  2. Goldman Sachs: US investment bank with very small commercial banking subsidiary
  3. Rothschild Bank: Swiss private bank, with business focussed on high net worth individuals
  4. Bank of India: 4th largest bank in India (state owned) with dominant position in deposit market
  5. BBVA: Spanish Bank operating in both retail and wholesale markets on a global basis

Here is the answer of this quiz.

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