Rebirth 79: I opened a bank in the United States

Chapter 1022 Different Regulatory Requirements

"Foreign-funded banks to open business in Japan need to meet a capital adequacy ratio of 10%, including core tier 25 capital and subsidiary tier [-] capital, and the proportion of subsidiary tier [-] capital cannot exceed [-]% of core tier [-] capital"

In the study, he was quietly reading a report on the adjustment of Japan's foreign investment policy.While reciting softly, Carter couldn't help sighing slightly.

Sure enough, I knew that with the Japanese temperament, or in other words, with anyone who has feelings for his motherland, it is not so easy to fool and conquer!
Constrained by the domestic pressure of people's livelihood, Japan, which had to bow to the United States, not only raised the upper limit of foreign shareholding!But still limited!
From a maximum of one quarter of the original to one third of today's
I don't know if it's because these Japanese also read Three Kingdoms?Just... three points in the world?Three pillars? !

Compared with the past, with one-third of the equity controlled by foreign capital, the things that can be done are much more than the original one-quarter!But it is absolutely impossible to get an overwhelming advantage.In other words, under such conditions, it is almost unrealistic for foreign capital to fully control Japanese companies!

And in the banking industry, it is even more ruthless!
It's open!

But it's not too much to ask for a little "small request", right? !

Compared with the current Japanese authorities' regulatory requirements for Japanese banks, the entry of foreign banks represented by the United States into Japan.
Let me talk about the difference first. The regulatory requirement for Japanese banks is that the capital adequacy ratio needs to meet 8%, and the proportion of subsidiary tier 50 capital cannot exceed [-]% of core tier [-] capital.Compared with the regulatory requirements for foreign-funded banks, it seems to be just a small fluctuation in numbers, but it can be put in reality.
To find out where the fatal point of this restriction is, you have to mention the "Basel Accords"!

According to the "Agreement on the Unification of International Bank Capital Measurement and Capital Standards" proposed at the Basel Conference, the bank capital classification system officially appeared.According to the agreement standard, the bank's core tier-one capital is the most stable, reliable and flexible capital owned by a bank, so as to ensure that the bank has the last firewall in the event of unexpected losses!

The capital that satisfies these three characteristics is often only: common stock, preferred stock capital, and retained earnings.Because of these things, it is easiest to calculate a value!And there is a high degree of conversion, such as selling stocks in exchange for cash to pay creditors represented by depositors.

Subsidiary Tier [-] capital, in terms of nature, is also inferior to Core Tier [-] capital.Usually includes: perpetual bonds, convertible bonds, irredeemable preferred shares, etc.
These things are all relatively new financial tools at present.For example, perpetual bonds.
Assuming that Company A now holds the perpetual debt of Company B, it means that Company B must pay Company A interest on a regular basis before redeeming the debt.As a long-term bond with no maturity date limit compared to ordinary bonds, the interest rate of perpetual bonds is usually very low, at least much lower than short-term and long-term bonds with the same rating.Compared with preferred shares that can also receive fixed income from the target company every year, perpetual bonds will not take up the company's equity!

Needless to say, convertible bonds and irredeemable preferred shares are relatively common. At first glance, this regulatory requirement seems to be excessive, right?It is only a little higher than that of Japanese banks, and the requirements for different capital ratios seem to be just to avoid risks.

But in fact, as the number one financial country on this planet, the development of these financial instruments and derivatives was quite rampant in the United States in the 80s.In other words, most of the banks in the United States today, including non-bank financial institutions, which one has not played to the sky? !Even though perpetual bonds were first popular in Japan, the scale of perpetual bonds in the United States is definitely not low now!

Whether it is the issuance of perpetual bonds, convertible bonds, or irredeemable preferred shares, to raise funds and expand the scale. Don't forget, 87 years ago, the US stock market was also a big bull!

In other words, the market sentiment in the United States was also frenzied at that time!It's just that compared to Japan, the madness is limited!
Against such a background, which normal commercial bank does not have a frighteningly high subsidiary Tier 25 capital? !Can't exceed [-]% of core tier [-] capital?Isn't this making things difficult for my Uncle Sam? !
Moreover, due to different regulatory rules, most banks in the United States today, including Carter's Black Flag Bank, do not meet the 10% asset adequacy ratio requirement, or it is difficult to meet it!
Now the Federal Reserve, including the Federal Deposit Insurance Corporation’s regulatory requirements for U.S. banks, according to the relevant provisions of the Bank Reform Act of 91: for banks with a risk-weighted average value lower than 20%, the minimum capital adequacy ratio requirement is only 4%; If the weighted average is higher than 20%, there is only an 8% capital adequacy ratio requirement
Carter silently calculated the general situation of Black Flag Bank:

Black Flag Savings, as a local savings bank, after the establishment of Black Flag Commercial Bank, most of the high-risk businesses of Black Flag Savings were divested.The business that is still in existence today is only housing loans, as well as providing some loans guaranteed by the federal government!

Whether it is the continuation of the Star Wars program, the need to focus on Florida, the need to establish aviation, satellite and other industrial zones, or the previous war preparations.Georgia has developed to a considerable extent in recent years, and when it comes to infrastructure, it is natural to spend money!In the past few years, there were many things in the United States, whether it was the bursting of the asset bubble caused by the 87 stock market crash or the subsequent decrease in fiscal revenue.There are not many people who can actually invest in the surrounding area of ​​Georgia in the form of cash.

But the federal government can come forward to provide guarantees to related companies, allowing them to borrow money from banks!As a well-known "big dog" with a surname in south-central Georgia today, Black Flag's savings will naturally be approached!In addition, in the federal center, you don't look at the face of the monk but the face of the Buddha. In the White House, in the United States, who doesn't know that someone in our card is from Lao Bu? !

Related business, not only will not be stuck, even with the step into the White House this year, the business volume in this area has increased a lot.Then, here comes the fun part!
According to the provisions of the new bill, the risk weight of this federally guaranteed loan is 0!

In addition, in order to support other affiliated companies, including Black Flag Commercial Bank, the amount of cash retained in Black Flag Savings is far more than that of other similar banks, and cash is also a risk-free asset with a risk weight of 0!

Finally, add some Georgia state bonds, Florida state bonds, or local bonds issued by municipal governments such as Douglas
Black Flag Savings Bank has an outrageously low risk-weighted ratio!
占总规模莫约30%的房贷，加权比重为50%；49%的联邦担保贷款和现金储备，加权比重为0；2%的学生助学贷款及其他抵押贷款，加权比重为50%；剩下19%的州债券、地方政府债券，加权比重为20%。

30%*50%+49%*0%+2%*50%+19%*20%=15%+0%+1%+3.8%=19.8%！

It doesn't even reach 20%, a standard that hardly any bank can fall below!

(End of this chapter)