Assessment of Basel capital regulations in the United States concluded by the Basel Committee
5 December 2014
The Basel Committee on Banking Supervision has today published a report assessing the implementation of the Basel capital framework in the United States.
The assessment was conducted under the Committee's Regulatory Consistency Assessment Programme (RCAP). A key component of this programme is to assess the consistency and completeness of a jurisdiction's adopted standards and the significance of any deviations in the regulatory framework. The RCAP framework promotes full and consistent adoption of the Basel framework by identifying domestic regulations for internationally active banks that are not in line with the letter and spirit of the relevant Basel standards. The RCAP assessments do not take account of a jurisdiction's bank supervision practices nor do they evaluate the adequacy of regulatory capital for individual banks or a banking system as a whole.
The assessment published today is based on the set of US regulations published in July 2013. It evaluated 13 of the 14 components of the risk-based capital standards as the US has implemented the Advanced Measurement Approaches for operational risk and opted to not implement the simpler approaches. The assessment concluded that seven of the 13 components meet all minimum provisions of the relevant Basel standards and these were therefore graded as "compliant". Four of the components were assessed as "largely compliant", reflecting the fact that most but not all provisions of the global standard were satisfied. Two components - the securitisation framework and the standardised approach for market risk - were assessed as "materially non-compliant".
RCAP assessments are summarised using a four-grade scale: compliant, largely compliant, materially non-compliant and non-compliant. A grade is assigned to each of the key components of a jurisdiction's risk-based capital framework and an overall grade is then determined. According to the Committee's RCAP methodology, a grade of "largely compliant" is applied if only minor provisions of the relevant Basel standards have not been satisfied and if differences that have only a limited impact on financial stability or the international level playing field have been identified. The overall grade for the US was therefore assessed this rating.
In carrying out this review, the Committee's assessment team held discussions with senior officials and technical staff of the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation. The team also met with a select group of US banks.
With today's publication, along with an assessment of the Basel capital regulations in the European Union, the Basel Committee has published 11 reports on its members' implementation of the Basel framework's risk-based minimum capital standards.
Notes to editors
The Basel Committee on Banking Supervision consists of senior representatives of bank supervisory authorities and central banks. Member countries include Argentina, Australia, Belgium, Brazil, Canada, China, France, Germany, Hong Kong SAR, India, Indonesia, Italy, Japan, Korea, Luxembourg, Mexico, the Netherlands, Russia, Saudi Arabia, Singapore, Spain, South Africa, Sweden, Switzerland, Turkey, the United Kingdom and the United States.
The RCAP is a central element of the Committee's continuing efforts to promote timely adoption of its standards and to monitor its members' full and consistent compliance with the Basel framework. The RCAP also helps member jurisdictions identify deviations from the Basel framework, weigh the materiality of any deviations and undertake necessary reforms. Based on the findings of these assessments, many assessed jurisdictions have already amended their regulations to align them more closely with the Basel framework, thereby helping to promote global financial stability and a level playing field for internationally active banks.
The Basel Committee has previously published jurisdictional assessments of Australia, Brazil, Canada, China, Japan, Singapore and Switzerland. In 2012, the Committee published preliminary assessments of the EU and the US.