Washington, D.C. — Bank Policy Institute President and CEO Greg Baer today released the following statement on the UK’s Basel capital announcement:
Today, the Bank of England announced its near-final adoption of the Basel capital agreement. After making substantial corrections to its original proposal, it announced that the final rule would increase capital requirements for UK banks by only 1% — a startling difference from the projected U.S. adoption.
Notably, the Bank of England joined the EU in supporting small businesses by eliminating a provision in the Basel capital agreement that prevents small business loans from receiving favorable capital treatment, even when they are considered investment-grade. In the U.S., small businesses will be subject to a higher capital charge even if they are investment-grade, which puts small business loans at a significant competitive disadvantage in terms of obtaining more favorable loan pricing. Research has shown that investment-grade small business loans perform just as well as those of publicly traded companies. America’s approximately 30 million small businesses will be watching to see whether the reproposal from U.S. banking agencies follows the now-global norm by giving them fair and accurate treatment.
###
About Bank Policy Institute.
The Bank Policy Institute (BPI) is a nonpartisan public policy, research and advocacy group, representing the nation’s leading banks and their customers. Our members include universal banks, regional banks and the major foreign banks doing business in the United States. Collectively, they employ almost 2 million Americans, make nearly half of the nation’s small business loans, and are an engine for financial innovation and economic growth.
Media Contact
Sean Oblack
Bank Policy Institute
sean.oblack@bpi.com
