Banking

Basel III Leverage Ratio: U.S. Proposes American Add-on; Basel Committee Proposes Important Denominator Changes

By Davis Polk & Wardwell LLP | Posted on

[Editor’s Note: The following update is authored by Davis Polk & Wardwell LLP]

On the heels of publishing the U.S. Basel III final rule, the U.S. banking agencies have proposed higher leverage capital requirements for the eight U.S. bank holding companies that have been identified as global systemically important banks (“Covered BHCs”) and their insured depository institution (“IDI”) subsidiaries. The higher leverage capital requirements, which we are calling the American Add-on, build upon the minimum Basel III supplementary leverage ratio in the U.S. Basel III final rule. (more…)

FDIC Approves Regulatory Capital Interim Final Rule

By Sarah G. Nowland, J.D. Candidate 2014 | Posted on

This month the FDIC Board of Directors approved the Regulatory Capital Interim Final Rule.  The final rule implements a revised definition of regulatory capital, a new common equity tier 1 minimum capital requirement, a higher minimum tier 1 capital requirement, and, for FDIC-supervised institutions subject to the advanced approaches risk-based capital rules, a supplementary leverage ratio that incorporates a broader set of exposures in the denominator.  It goes into effect January 1, 20104.  (more…)

Basel Committee Proposes New Capital Requirements for Banks’ Equity Investments in Funds

By Sarah G. Nowland, J.D. Candidate 2014 | Posted on

On July 5 the Basel Committee on Banking Supervision published a series of proposals to revise banks’ equity investments in funds.  The revised standards are meant to “more appropriately reflect the risk of a fund’s underlying investments and its leverage” and “help address risks associated with banks’ interactions with shadow banking entities.”  The proposals are “based on the general principle that banks should apply a look-through approach to identify the underlying assets whenever investing in schemes with underlying exposures such  as investment funds.”  (more…)