The Basel II capital rules will "accelerate" consolidation in the banking industry because many institutions do not have the resources to implement the new risk-based capital standard, according to Citigroup's chief financial officer.Citigroup CFO Todd Thomson said it will be difficult for many banks to implement Basel II. "It is hard to do, and it is expensive to do," he told an American Institute of Certified Public Accountants meeting in Washington. Banking companies need to be diversified to take advantage of the new RBC standard, and that "will also drive further consolidation," he said. Citigroup's merger and acquisition team generally has 100 companies under review at any one time, he told the CPAs. "Although Basel II is overly complicated and somewhat flawed," it takes into account the way banks measure risk and manage risk. It is a "fabulous step in the right direction," Mr. Thomson said. Federal regulators are still working on RBC rules, which will not go into effect for several years.

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