Pillar 2 moves to centre stage for op risk capital

US banks set for sharp falls in Pillar 1 requirements, but regulator-set add-ons cloud SMA’s impact

Image of money stack

The transatlantic divide that exists between US and European banks on expected changes in operational risk capital under Basel III could be smaller than it first appeared. While European banks in general will likely see an increase in their capital requirements, and US banks a decrease, the differences may be offset at least in part by Pillar 2 adjustments.

For European banks tipped to see a steep rise in Pillar 1 capital under the new approach, such clemency would be good news. But it could

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