S&P warns banks against reducing capital too soon in anticipation of Basel II

Bugie said during a teleconference call in mid-October that there was a danger that financial firms under Basel II would be tempted to reduce their capital levels in anticipation of a widely expected Basel II effect – regulatory capital reduction. He said even after the implementation of Basel II, a bank that will adjust its regulatory capital downwards without a change in its economic capital would face a ratings review. But S&P will not review the ratings of banks that will fail to impleme