Changing Bank Capital Rules: Impact on Loan Structures and Loan Documentation

Yield Protection and Increased Costs Provisions, Transfer Restrictions, Purpose Clauses, HVCRE ADC Loans, and More

Recording of a 90-minute premium CLE webinar with Q&A

Conducted on Thursday, May 2, 2019

Recorded event now available

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Program Materials

This CLE webinar will cover upcoming changes to the U.S. bank capital rules as well as and how they will impact the commercial lending landscape. The panel will discuss how loan structures and loan documentation and provisions may be changed by lenders to meet these new requirements.


In October 2018, as a result of the 2018 Dodd-Frank reform bill, the federal banking agencies proposed rules to tailor U.S. bank capital and liquidity requirements. As proposed, capital and liquidity requirements will vary according to which of four asset categories a bank belongs. This may impact the cost of borrowing as certain banks may be required to retain more capital and meet liquidity and stable funding ratios concerning certain loan portfolios and others may not.

Terms and provisions in loan documents can affect the classification of certain loans and their treatment under the capital rules, and some loans can be structured to avoid being subject to avoid certain of the capital rules. Bank counsel must have a thorough understanding of the nuances of the capital rules in order to minimize its impact on profitability in any given transaction.

Distinct requirements for high volatility commercial real estate loans used to finance acquisition, development or construction (HVCRE ADC loans) increase risk weighting for certain commercial real estate loans which, in turn, requires lenders to retain more capital. To avoid HVCRE ADC classification, real estate loans must meet complex LTV and borrower investment requirements, most recently revised under the 2018 Dodd-Frank reform bill.

Listen as our authoritative panel of regulatory and finance attorneys analyzes the current and proposed U.S. capital rules, the impact on the commercial lending environment, and how lenders may alter loan structures and loan documentation to minimize its effects.



  1. Overview of U.S. capital rules
    1. Capital ratios
    2. Leverage ratios
    3. Liquidity ratios
    4. Proposed asset categories
    5. Impact on the commercial lending landscape
  2. Loan documentation for non-real estate loans
    1. Yield protection provisions and increased costs clauses
    2. Transfer restrictions
    3. Purpose clauses (liquidity facility or not)
  3. Overview of HVCRE ADC regulation
    1. LTV ratio and how it is calculated; borrower's equity, the 15% rule
    2. Loan structuring issues - addressing HVCRE ADC issues in your loan documents


The panel will review these and other key issues:

  • How will changes to the U.S. capital rules impact the commercial lending landscape?
  • What loan documentation provisions are of critical concern for lenders, and where is there room for negotiation?
  • How can HVCRE ADC loans be structured to avoid or minimize additional capital retention requirements?


Biddle, Laura
Laura R. Biddle


Ms. Biddle advises U.S. and foreign banking organizations, non-depository lenders, and providers of payment and other...  |  Read More

Wagner, William
William R. Wagner


Mr. Wagner has extensive experience with the structuring and negotiation of secured and unsecured credit facilities on...  |  Read More

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