The US federal banking regulators recently proposed extensive revisions to the regulatory capital requirements, referred to as the Basel Endgame. The July and August proposals – targeted at banks with $100 billion (or more) in assets – are of critical importance, as the amount of capital a bank must maintain with respect to any particular loan, investment, or activity is often the most significant factor in determining whether the relationship is profitable – or even feasible. Some of the proposed revisions were expected, but others have been motivated by the recent banking crisis.
The Basel Endgame and long-term debt rulemakings will not be the end of the discussion on regulatory capital requirements. Larger banks, their counterparties, and their competitors, all are expected to respond by making changes to their product offerings, operations, and capital structure. Some of these changes are obvious or easy, but others will require sustained commitment and attention to detail.
Access publications, podcasts, and seminars on our Basel Endgame Resource Center, and keep current on related developments.