Overhaul of Regulatory Capital Requirements Proposed by US Banking Regulators

On July 27, 2023, US federal banking regulators issued proposals to (i) significantly revise the risk-based regulatory capital requirements for certain midsize and larger US banking organizations (the “Capital Proposal”) and (ii) change the method for calculating the capital surcharge for globally systemically important banking organizations (“G-SIBs”) (the “G-SIB Surcharge Proposal”). These proposals are of critical importance because the amount of capital a bank must maintain with respect to any particular loan, investment or activity is typically a significant – if not the most significant – factor in determining whether the relationship is profitable or even feasible. Comments on both proposals are due by November 30, 2023.