The US federal banking regulators recently proposed extensive revisions to the regulatory capital requirements for midsize and larger US banks. The proposal would dramatically increase the amount of capital that larger banks must hold and is expected to result in US banks reducing the availability of certain products or increasing their prices. Non-US banks and corporates will need to consider how they source financing and other products from US banks. They also will need to consider whether there are alternative structures or sources for certain types of bank products that may not be penalized as harshly under the proposal. For example, we expect to see many banks and customers investigate risk transfer and securities financing transactions as ways to reduce the regulatory charge for the bank.
More broadly, US banks will face challenges in executing certain types of US and cross-border deals, creating opportunities for non-US banks and US nonbank lenders. While the proposal may push non-US banks to continue to shrink their US operations and intermediate holding companies, there often is no need for a bank to establish a US presence to service many types of US businesses. This is particularly true for derivatives, which are explicitly called out in the proposal for more punitive capital charges.
Mayer Brown Forum invites you to attend the next session in our exclusive webinar series for the legal sector: “What US Basel Endgame Means Outside of the United States”.
Learning objectives
This program will help you:
- Learn what is changing about the US regulatory capital requirements.
- Understand how this may affect your non-US bank and corporate clients.
- Begin to explore US opportunities and more cost-efficient alternatives.
- Appreciate the halting and haphazard pace of US financial regulation.
