Financial Regulatory Forum

New U.S. capital framework may prove burdensome for small banks

By Bora Yagiz

NEW YORK, June 25 (Thomson Reuters Accelus) - As part of an effort to bring the United States in line with the international standards of Basel III, the Federal Reserve Board, the Office of the Comptroller of Currency (OCC) and the Federal Deposit Insurance Corporation (FDIC), on June 8, 2012, jointly proposed three rules dubbed together as the integrated regulatory capital framework.

Two of these rules, namely the proposal on Basel III, and the proposal on Standardized Approach (the approach used by small banks) would modify standards for risk-weighted assets calculation, set new minimum capital requirements and refine capital quality through various eligibility restrictions for all banks, savings associations, bank holding companies (BHC) with greater than $500 million of assets, and all savings and loan holding companies (SLHC). (more…)

ANALYSIS-Bank capital rules are regulatory drive’s top test

By Huw Jones

LONDON, May 4 (Reuters) – This month could bring overdue progress in a global drive to regulate the financial sector in the European Union and United States, but the acid test for policymakers will be agreeing global bank capital rules.

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New Basel rules could hit synthetic CDOs – Goldman Sachs

By Jane Baird

LONDON, March 2 (Reuters) – New bank capital rules could deal the final blow to any resurgence of deals in synthetic collateralised debt obligations as well as hurt the value of $330 billion of existing triple-A tranches, Goldman Sachs said.

Proposed changes to Basel II rules, effective end-2010, would increase bank capital requirements by an estimated 11.5 percent overall and 223.7 percent in the trading book, according to a study by the Bank for International Settlements.

At the height of the financial crisis, fears of a market meltdown and defaults of investment-grade credits such as Lehman Brothers drove spreads of synthetic CDOs, also known as collateralised synthetic obligations (CSOs), sharply wider.

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