WASHINGTON — Systemically important institutions will have to wait until next year to find out how much additional capital they will have to hold under the new Basel III standards.
At a two-day meeting of the Basel Committee on Banking Supervision, regulators agreed to complete a study by the middle of 2011 that would shed light on how much extra capital banks considered systemically risky would have to hold in addition to the capital and liquidity requirements under Basel III.
Additionally, the committee, which has said that all capital must be loss-absorbing, said it is assessing how other instruments could also absorb losses.
While more work lies ahead, the committee agreed on key elements of the proposal in order to ensure that capital would be loss-absorbing even if an institution was in danger of failing, and said it would elaborate on rules concerning traditional arrangements and grandfathering.
Regulators met to agree on details of the Basel III rules text, which was first brokered in July by the committee's oversight body, Central Bank Governors and Heads of Supervision. Leaders of the Group of 20 nations signed off on the agreement at their annual summit in Seoul in November.
As part of the meeting, the committee agreed to allow the liquidity coverage ratio and the net stable funding ratio to be subject to an observation period and included a review clause to address any unintended consequences.
The final Basel III rules text will be published at the end of this year.
