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Basel III still a pricey issue for smaller banks 

January 13, 2014
Marshall Schraibman and Nathan Stovall, ABA Banking Journal

Smaller banks, institutions with less than $15 billion in assets, found themselves in better shape to comply with the final Basel III rules than the originally proposed capital standards, having the opportunity to count trust preferred securities as capital and avoid potential volatility in their capital ratios by opting out of a provision that would include unrealized gains and losses in regulatory capital.

However, at the end of the third quarter, they still had a capital shortfall to the Basel III rules in excess of $1 billion, and even a greater number of institutions fell short of the requirements than witnessed in the prior period. The capital shortfall just might become greater for some of those institutions, as they could face a capital hit should they have to divest disallowed securities under the Volcker rule.

Under the final Basel III rules, smaller institutions, including all S&Ls, will have until January 2015 to begin phasing in Basel III capital rules. Large, internationally active banks must begin phasing in Basel III requirements in January 2014.

Read more: ABA Banking Journal

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