The table below displays a simplified balance sheet for a financial institution (£ billion).
| Assets (£ billion) | Liabilities & Equity (£ billion) | ||
|---|---|---|---|
| Cash & central bank reserves | 25 | Customer retail deposits | 5 |
| Trading assets & debt securities | 280 | Short-term wholesale funding | 215 |
| Reverse repurchase agreements | 110 | Trading liabilities | 180 |
| Loans to businesses | 65 | Long-term debt | 60 |
| Other assets | 20 | Shareholders' Equity | 40 |
| Total Assets | 500 | Total Liabilities & Equity | 500 |
Based on this balance sheet, which of the following is the most reasonable conclusion?
most likely a commercial bank because its primary assets consist of loans to businesses.
most likely an investment bank because it relies primarily on wholesale funding rather than customer retail deposits to finance its activities.
highly illiquid because over 50% of its assets are held in trading assets and debt securities.
technically insolvent because its short-term wholesale liabilities exceed its cash and central bank reserves.
