The regulator could establish minimum capital requirements for the two companies and limits on their portfolios.
Broadly, Basel 2 banks are likely to have lower minimum capital requirements than Basel 1 banks.
These accords are a global regulatory standard on bank minimum capital requirements, bank liquidity, and bank leverage.
FORBES: Basel Barriers: How capital requirements would impede progress in the sovereign debt crisis
The Basel Committee is also trying to set minimum capital requirements, which would make banks more able to absorb losses.
Basel I was reached in 1988, set minimum capital requirements for banks and is enforced by law in the G-10 countries.
FORBES: Basel Barriers: How capital requirements would impede progress in the sovereign debt crisis
Establishing large minimum capital requirements unnecessarily prevents new businesses from being formed.
Basel II left the minimum capital requirements at 8% of risk-weighted assets.
FORBES: Basel Barriers: How capital requirements would impede progress in the sovereign debt crisis
In the credit-risk area, the weight attached to mortgages looks likely to drop by 30-50%, cutting the minimum capital requirements of banks specialising in home loans.
Because they have counted this as a cost, they say that minimum capital requirements should be calculated on the basis of credit-card assets net of expected losses.
In the UK, the Vickers Report recommended that UK retail operations of domestic banks be fenced away from their trading activities by 2019, and subject to higher minimum capital requirements.
And Egypt has proven a remarkable reformer recently, slashing minimum capital requirements for starting a business, cutting costs for property registration and speeding up shipping times on imported and exported goods.
The ICB's other headline proposal is that large British banks should have to hold bigger buffers against losses than currently proposed under Basel 3, a new international agreement on minimum capital requirements.
The first priority for these restructuring candidates will be to satisfy minimum solvency requirements, but tapping new sources of capital will strain their capabilities.
In such a scenario, since local subsidiaries (Brazil, Mexico, Chile, Colombia and Peru) cannot reduce capital reserves below a certain level, we assume these subsidiaries would only lower their capital reserves up to one standard deviation above the legal minimum, to prevent potentially violating any regulatory requirements during periods of heightened volatility.
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