OTS Issues Final Basel II Rule

The Office of Thrift Supervision has issued the final Basel II risk-based capital rule, and the other banking regulators are expected to follow soon.The long-awaited capital rule is designed for the largest U.S. banks with international exposure. But large regional banks that want to use an internal ratings-based approach to calculate their RBC requirements can also adopt it. The OTS noted that the regulators are working on the "standardized approach," which is an upgrade of the current Basel I RBC standard, and they expect to issue a notice of proposed rulemaking in the first quarter. The American Bankers Association urged the regulators to act quickly on the standardized RBC approach so that the majority of U.S. banks are not left at a competitive disadvantage to the large Basel II banks. "We look forward to working with the regulators on the prompt development of the standardized approach," ABA executive director Wayne Abernathy said.