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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”.
This program will help you:
- Learn what is changing about the US regulatory capital
- Understand how this may affect your non-US bank and corporate
- Begin to explore US opportunities and more cost-efficient
- Appreciate the halting and haphazard pace of US financial
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Mayer Brown article provides information and comments on legal
issues and developments of interest. The foregoing is not a
comprehensive treatment of the subject matter covered and is not
intended to provide legal advice. Readers should seek specific
legal advice before taking any action with respect to the matters
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