Foreign banks covered by US capital rules

Foreign banks with operations in the US will now have the same type of capital requirements as domestic bank holding companies.

The provision in the Collins amendment will impact stand alone capital rules in the jurisdiction of the parent company and includes complicated tax issues.

“In some jurisdictions, stand alone capital calculations at the parent level will mean that if investments in the US bank holding companies are converted into an equity type security to meet this new provision, there could be a deduction from the holding company’s stand alone calculations,” said Anthony Ragozino of UBS Securities during an IFLR web seminar.