Capital is a common denominator limiting virtually all of a banking institution’s investments and activities. Banking institutions must satisfy specified capital ratios, and different assets and exposures are subject to varying capital charges depending upon their perceived risk. Particularly for activities incurring a higher capital charge, these requirements can force a bank to cease or limit an activity, or generate or reallocate capital from other business lines to support it.
Basel III, as summarized below, will heighten capital requirements for banks worldwide. For U.S. banks, there is the additional concern of the integration of Basel III with the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), which became law on July 21, 2010. Both the Basel Committee on Banking Supervision (Basel Committee), internationally, and the Federal Reserve with respect to Dodd-Frank, are expected to mandate higher capital ratios for the largest banks, referred to as systemically important financial institutions or “SIFIs.”
This content has been archived. It is available through our partners, LexisNexis® and Bloomberg Law.
To view this content, please continue to their sites.
Not a Lexis Subscriber?
Subscribe Now
Not a Bloomberg Law Subscriber?
Subscribe Now
LexisNexis® and Bloomberg Law are third party online distributors of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® and Bloomberg Law customers are able to access and use ALM's content, including content from the National Law Journal, The American Lawyer, Legaltech News, The New York Law Journal, and Corporate Counsel, as well as other sources of legal information.
For questions call 1-877-256-2472 or contact us at [email protected]
