On July 27, 2023, US federal banking regulators issued proposals to significantly revise the risk-based regulatory capital requirements for certain midsize and larger US banking organizations (the “Capital Proposal”) and change the method for calculating the capital surcharge for global systemically important banking organizations (“G-SIBs”). These proposals are of critical importance because the amount of capital a bank must maintain with respect to any particular loan, investment or activity is typically a significant—if not the most significant—factor in determining whether the relationship is profitable or even feasible.

One concern with the Capital Proposal that has received significant attention in recent weeks is the extent to which, and the areas in which, US regulators deviated from the international standards maintained by the Basel Committee on Banking Supervision. In this Legal Update, we explore a number of these deviations and some of their implications for US banking organizations and the US financial markets.

To learn more, read our legal update.