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Course Details

Course Information
  • smart_display Format

    On-Demand

  • signal_cellular_alt Difficulty Level

    Intermediate

  • work Practice Area

    Real Property - Finance

Date & Time
  • event Date

    Wednesday, January 17, 2024

  • schedule Time

    1:00 p.m. ET./10:00 a.m. PT

  • timer Program Length

    90 minutes

Credit Information

  • This 90-minute webinar is eligible in most states for 1.5 CLE credits.

$347.00
CLE
ALL

This CLE webinar will cover the recent release of proposed regulatory capital requirements (known as the Basel III Endgame) and how they will impact the commercial real estate finance sector. The panel will discuss how the requirements may increase the capital charge and alter the requirements for assessing operational and market risk.

Faculty

Matthew Bisanz
Partner
Mayer Brown LLP

Mr. Bisanz counsels domestic and global financial services firms on a variety of banking and derivatives regulatory issues. He advises financial institutions on core bank regulatory issues and adjacent subject matter domains. Mr. Bisanz is knowledgeable in all major aspects of the operations of an insured depository institution, its affiliates, and its partners—including chartering, acquisition, and permissibility analyses; ongoing risk management, governance, and compliance requirements; and insolvency and resolution issues. He also advises clients on Dodd-Frank Act compliance issues, including the Volcker Rule, capital and liquidity requirements, Reg YY enhanced prudential standards, and Title VII compliance. Further, his practice extends to the other regulatory and risk management needs of the firm’s financial institution clients through counseling on regulatory inventories and change management, cybersecurity and data privacy concerns, and anti-money laundering compliance. Mr. Bisanz currently serves as the Vice-Chair of the American Bar Association’s subcommittee on banking legislation and regulation.

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Miller Smith
Partner
Mayer Brown LLP

Ms. Smith is a partner in Mayer Brown’s Banking & Finance practice where her practice is concentrated in the area of structured finance and real estate finance matters. Ms. Smith regularly represents borrowers and lenders in commercial, multifamily and residential mortgage warehouse facilities, including representing institutional lenders in connection with the syndication of such facilities. Her experience also includes advising clients in connection with whole loan acquisitions and dispositions and the administration of their commercial mortgage loan portfolios. She has also represented underwriters, mortgage loan sellers and servicers in connection with commercial mortgage-backed securities transactions. Ms. Smith also has experience advising clients in connection with regulatory matters, including risk retention, Regulation AB II and Rule 15Ga-1.

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Eric M. Reilly
Partner
Mayer Brown LLP

Mr. Reilly is the Banking & Finance practice leader and hiring partner for Mayer Brown’s Charlotte office. His practice focuses on structured finance and real estate finance matters. Mr. Reilly regularly represents borrowers and lenders in commercial, multifamily and residential mortgage warehouse facilities, including facilities structured to finance nonperforming loans, non-QM loans, reverse mortgage loans and home equity loans. He also regularly represents financial institutions and finance companies in the securitization of mortgage loans and other real estate assets, including advising issuers and underwriters in the structuring and execution of CRE CLOs. Additionally, Mr. Reilly advises underwriters in connection with mortgage insurance-linked note transactions.

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Description

In late July 2023, U.S. federal banking regulators jointly released proposed changes to the capital requirements for midsize and larger U.S. banking organizations. These revisions will likely be one of the most consequential changes to U.S. banking regulation since the 2010 passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The revisions are lengthy and significantly change the requirements for credit, market, and operational risk. Some of the revisions are long expected (e.g., reevaluation of the use of internal models), but others are novel (e.g., capital charge for operational risk) or driven in response to the recent banking crisis. Further, the revisions are expected to materially increase the amount of capital that many larger banking organizations must hold, which may lead to a decline in bank lending and bank trading activities.

The proposals are not "capital neutral," and although they do not specifically target commercial real estate, there are significant collateral effects on this sector. Specifically, the proposed changes will increase the capital requirements for securitization exposures, require banks to look at the overall performance of the borrower with respect to all credit obligations, and change the capital treatment for unconditionally cancelable commitments. Further, the proposed rules assign higher risk weights for residential and commercial real estate.

Listen as our authoritative panel of bank regulatory and commercial real estate attorneys analyzes the proposed U.S. capital rules and what they mean for the commercial real estate finance sector.

Outline

  1. Overview of Basel III Endgame requirements
    1. Changes to risk weights under the standardized approach
    2. Restrictions on use of models under models-based market risk approaches
    3. Revisions to the credit valuation adjustment risk framework
    4. Overhaul of operational risk framework
    5. Refinements to leverage ratio framework
    6. Creation of output floor on regulatory capital benefits for banks using advanced approaches
  2. Banking organizations impacted by the new proposed regulations
  3. Impact on commercial real estate sector
    1. Securitizations and CMBS and CLOs
    2. Performance of the borrower for credit and operational risk purposes
    3. Change in capital treatment for unconditionally cancelable commitments
  4. Key takeaways and practical implications

Benefits

The panel will address these and other key issues:

  • What are the key changes to the U.S. capital rules and how will these changes impact commercial real estate?
  • What banks are impacted by the proposed new requirements?
  • How will these proposed changes impact securitization exposure for commercial mortgage-backed securities (CMBS) and collateralized loan obligations (CLOs)?
  • How will banks assess the performance of a borrower with respect to credit obligations under the new rules?
  • What will be the impact of these proposed new rules on committed warehouse facilities and unconditionally cancelable commitments?