Overview

The Group of Governors and Heads of Regulatory Supervision, who oversee the Basel Committee on Banking Supervision, have announced measures to strengthen the capital requirements of financial institutions as part of the introduction of Basel III.

The reforms introduce a series of minimum capital requirements to be phased in from 2013 to 2019 affecting common equity, Tier 1 and 2 capital and reclassifying some categories of investments which will no longer class as capital.

The minimum common equity banks are required to hold will increase from 2 per cent to 4.5 per cent, in addition to a new capital conservation buffer of 2.5 per cent, bringing the total common equity requirements to 7 per cent. The regulatory adjustments made to common equity will also become stricter.