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Thursday, December 10, 2015

Basel Committee Propose Revisions to Risk-Based Capital Framework

The Basel Committee on Banking Supervision (BCBS) published a second consultative paper regarding “Revisions to the Standardized Approach for credit risk,” which revised some of the proposals made last year. The proposed revisions primarily impact large, internationally active banks and not community banks. Changes made include the reintroduction of external credit ratings, for jurisdictions that allow the practice, and modification of the proposed risk weighting of real estate loans, driven mainly by the loan-to-value ratio.

The Federal Reserve, FDIC, and OCC will consider the proposals outlined in the paper with the goal of developing a stronger and more transparent risk-based capital framework for the largest institutions. Interested parties are encouraged to review the consultative paper and provide comments directly to the BCBS Secretariat.

Comments are due March 11, 2016.

Read the Basel paper.

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