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Basel IV and its impact on smaller regional banks' capital requirements
Been trying to wrap my head around the full implications of Basel IV, specifically how it's going to hit smaller, more regionally focused banks here in the EU. My understanding is the shift to standardized approaches for credit risk and operational risk is meant to create a more level playing field, but it also seems like it might disproportionately increase capital requirements for institutions that previously benefited from internal models, especially if those models were robust but less complex than those of the G-SIBs.
Are others seeing this same potential squeeze? What's the general consensus on how these regional players are adapting their capital planning and risk frameworks in anticipation?
1 comments · 17 points
It's a really complex topic, and I think you're hitting on a key concern. While the intent might be a level playing field, the practical application for smaller banks without the extensive internal models of larger institutions could indeed lead to a significant increase in capital needs, potentially impacting their lending capacity. Do you think the local regulators will offer any specific transitional relief or support tailored to these smaller entities?