Executive Summary

The Basel Committee on Banking Supervision (BCBS) began a comprehensive revision process of global bank capital standards in 2010 in the aftermath of the 2007-2009 global financial crisis. 

The objective was twofold: to increase the amount of capital in the banking system, and to reduce variation in the calculation of risk-based capital charges across banks. 

The first set of revisions, known as Basel III, was finalized in 2011 and implemented in the United States (US) in 2013. It aims to enhance the regulation, supervision, and risk management of banks globally.

The next set of revisions, referred to as Basel IV or the 'Basel Endgame', was finalized in 2017. It looks to mitigate excessive variability in capital requirements. 

The European Union (EU) and the United Kingdom (UK) have published proposed rules to implement the Basel IV framework. 

In the US, the Federal Deposit Insurance Corporation, along with the Federal Reserve and the Office of the Comptroller of the Currency, is expected to issue a Notice Of Proposed Rulemaking soon to implement Basel IV.

The implementation of Basel IV in the US will prompt banks to change the structure of their businesses and balance sheets to meet the new and amended capital requirements. 

In the wake of the failures of Silicon Valley Bank and Signature Bank and the resultant hit to market confidence, the regulatory agencies may consider applying the revisions to banks with assets over $100 billion. 

The revisions are likely to enhance capital adequacy, credit risk management, liquidity requirements, and transparency for a wider set of US banks.

These banks should seize this opportunity to bolster risk management practices, optimize capital allocation, fortify overall resilience, and position themselves for success amid a dynamic regulatory landscape.