Equias Alliance, a company that provides professional services related to bank-owned life insurance and nonqualified benefits, recently released a report that offers information on how Basel III's New Capital Rule will impact community banks.
This guidance could prove helpful to a wide range of financial market participants, because many have expressed concerns about how these smaller lending institutions will be impacted by the capital guidelines created by the Basel Committee on Banking Supervision.
The Independent Community Banks of America, an organization that represents these financial institutions, lobbied government agencies to exempt community banks from the Basel III requirements altogether, according to The Business Journals.
While community banks will not start begin implementing The New Capital Rule until January 1, 2015, the provisions contain various changes. The rule has provided these smaller lending organizations with a new capital conservation buffer and added a new level of common equity tier 1 risk-based capital.
It also included the new guidelines in the Prompt Corrective Action framework and established a period whereby the new provisions could be adopted.
Lending institutions across the United States received an updated set of Basel III guidelines as a result of the actions taken by the nation's federal government regulators in July 2013.
◦ Asset Liability Management
◦ Portfolio Risk
◦ Sensitivities & Hedging
◦ Stress Testing & Scenario Analysis