Unlike their money-center counterparts, the nation's big regional banking companies, with their relatively prosaic balance sheets, are not set for a dramatic metamorphosis under the pending Basel III risk weightings.
With most having finished the third quarter above the new regulatory framework's universal Tier 1 common equity ratio target of 7%, many have expressed comfort about the coming transition. Nevertheless, capital issues are still pressing: Among them, federal bailout investments remain outstanding, and reductions in asset portfolios have been important in controlling leverage at some institutions in the sector (see charts below), raising doubts about their fundamental profitability.
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