On June 7, 2012, the Federal Reserve Board approved three proposals implementing the Basel III capital standards. The Basel III proposals could fundamentally change how bank calculate their regulatory capital requirements. The proposals would increase the minimum levels of required capital, narrow the definition of capital, and increase the risk weights assets for various asset classes.
Required Capital Ratio(s) ( ↑ ↑ ) = Capital (Narrowed) / Risk Weighted Assets ( ↑ )
For further information, please contact Hugh Carney, Senior Counsel, Office of Regulatory Policy, at 202-663-5324.
Below is information related to the proposals and the international accord which the regulators are trying to implement.
Basel III Update
Basel III Update January 2013
Responses to the Basel III Proposals
- ABA Mutual Banks Comment Letter on Basel III, October 25, 2012
- ABA, SIFMA, and FSR Comment Letter on Basel III, October 22, 2012
- ABA Supplement to Joint Trades Basel III Letter, October 22, 2012
- FSR and ABA S&L Holding Company Letter in Basel III, October 22, 2012
- Link to other letters filed with the Agencies
Steps to Consider in Analyzing Basel III's Impact on Your Bank
- Top Twelve Questions to Apply to Your Bank
- Banking Agencies' Basel III Calculator
Note: Banking Agencies’ Basel III Calculator - ABA cautions overreliance on the calculator’s results. The calculator offers banks only a point in time and high level overview of the of capital requirements under the proposed rules to assist institution’s in their analysis. Actual impact of the proposed rules is heavily dependent on technical new definitions, individual loan underwriting data and changing market conditions. ABA experts note that the calculator is a point in time assessment that does not take into account the increased volatility that results from the proposals allowing unrealized gains and losses to flow through capital. Therefore, there may be institutions that meet the minimum requirements today, but could fail to meet certain capital requirements in a raising rate environment. The calculator also includes several gaps, including the securitization treatment. The ABA has developed a private label securitization calculator (see below) to assist banks in analyzing the impact of the proposed securitization treatment on their applicable portfolio.
- SSFA Private Label Securitization Calculator
Draft Your Own Comment Letter
It is extremely important for banks of all sizes to provide comment on the proposals. The following links are designed to assist bankers in doing so. As the ABA comment letter working group continues review the proposals new "issues to consider" will be added to this website. If you are drafting a comment letter, feel free to take language from the "issues to consider" links. If you would like to add your own issue to the list please send me an email at email@example.com
with "Issue to consider" in the subject line. Comments are due October 22.
Issues to Consider and recommended position:
Examples of Great Letters from ABA Bankers:
Proposals and Related Materials
Community and Regional Bank Focus - Federal Reserve Summaries
Banking Agencies' Industry Outreach
Related Basel Committee Documents