Basel III seems to be so important and all-encompassing that it could affect anything, and everything, but insurance policy watchers are still pondering the implications.
The “group of governors and heads of supervision,” the body that oversees the Basel Committee on Banking Supervision, Basel, Switzerland, announced Sunday that it has endorsed the bank capital standards it released in July.
The full text of the standards approved by the Basel Committee board does not yet appear to be available, according to the Basel III Compliance Professionals Association, Washington.
But the Basel Committee board has increased the minimum ratio of common equity to risk-adjusted assets to 7%, from 2% today. The total will include an increase in the ratio of “core tier 1 capital,” or “common equity after deductions,” to risk-adjusted assets to 4.5%, from 2%, and the addition of a new 2.5% “capital conservation buffer.”
In countries where credit bubbles appear to be forming, banks will have to hold an additional “countercyclical buffer” of up to 2.5%, and “systemically important banks” are supposed to have extra loss-absorbing capacity, officials say.
World regulators are supposed to phase in the new capital requirements over a 2-year period starting Jan. 1, 2013.