This workout asks us to calculate the minimum amount of CET1, or Common Equity Tier 1, that the bank would need to hold under Basel III. The first step is to identify the weightings for each of these categories from Basel III. For Cash, U.S. Treasuries, and U.K. Gilts, these are considered very low-risk amounts, extremely likely that they will be paid out in full. And therefore the weighting is 0% for each of these three. For Loans to retail customers, Basel III prescribes a weighting of 75%, being relatively high-risk. For residential mortgages, the rating is lower, only 35%, as these are normally backed up by significant collateral, i.e. the house that has been mortgaged. Commercial mortgages, which tend to have a large payment, large redemption payments at the very end, the rating is higher, the rating is 100%.

We can then multiply the amounts by the weighting to give the risk-weighted assets. So we simply take the value and multiply by the weighting, and that gives us the risk-weighted assets.

We can then simply copy this down to calculate all of the risk-weighted assets. And then at the bottom, using Alt + =, simply sum these amounts up. That gives us a total risk-weighted asset of 343.8, and that's in millions of dollars. Under Basel III, the minimum CET1 ratio is 4.5%, so simply taking the 4.5% by the total of risk-weighted assets gives us a minimum CET1 requirement of 15.5.