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Calculating cost of finance (COF) is quite individual for different banks. basically the things included in the calculation are: 1. Interest rates of deposits between the banks in the country you are in (in EU it is the EURIBOR, England has its LIBOR, etc.) - for your currency and different indicator for foreign currency (in UK they use EURIBOR for EUR and LIBOR for GBP). 2. The assets the bank has. 3. The liabilities - here things get messy, because they calculate the used liabilities as revenue and the liabilities they don't use, as expenditure (because you pay interest on these liabilities). 4. Some other factors. So, all these things have some weight and through some complicated formula you get some result. Basically, I am not really sure that is the truth, but from the things i have heard and seen and from my own deductions, that is what i came up with.

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