The winners and losers under US Basel III

Author: Danielle Myles | Published: 17 Jul 2012

The Federal Reserve's June 12 proposal of rules implementing Basel III was praised as a crucial step towards a harmonised global capital framework. But the rules create a dubious future for US banks regarding Tier 1 contingent convertible capital (Cocos), a battle on risk weightings, and capital raising problems for small banks.

The announcement came almost 18 months after the Basel III framework was finalised and almost a year after the European Commission (EC) released its own implementing package - the Capital Requirements Directive IV (CRD VI).

US implementation of Basel III was expected as early as a year ago, and a month before the Fed's announcement a number of New York partners expressed concern that the latest accord would suffer a similar fate to Basel II, which was never fully implemented in the country. But last month's release was welcomed by US attorneys for reasons beyond principle; largely because the...