Top central bankers and regulators gathered in Switzerland over the weekend and finalized the Basel III accord late Sunday. The new rules come just three years after Basel II was adopted. A lot is riding on the outcome of this, as the required ratios and the timetables for adoptions could have a huge impact on operations and profitability of banks around the globe. 

The new standard: Lenders will have to hold common equity equal to at least 7 percent of assets, weighted according to their risk, a standard that includes a 2.5 percent buffer to withstand future shocks. Banks will have to comply with the common equity standard starting in January 2015. They have until 2019 to meet the buffer requirement. 

For banks around the world, this is a momentous event. Bank stocks were whipped around in anticipation. And the last minute lobbying was intense. Many banks around the globe will be forced into capital raising mode. Recall that Deutsche Bank is planning a rights issue to raise enough capital to meet the new ratios. Lots of other banks, in Germany and elsewhere, will likely follow suit. European banks in general have a lot of capital to raise. 

For U.S. banks, the new standards have also left some work to be done. Most have been in capital raising mode since the financial crisis, but the definition of Tier 1 capital has been narrowed by the Basel committee. It now includes common equity and perpetual preferred stock; hybrids no longer fully count toward meeting capital requirements. Of the 24 U.S. banks in the KBW Bank Index, 7 banks, including Bank of America and Citigroup, would miss the new required ratios, notes Bloomberg.

While some feel that regulations generically will hurt banks long-term, at least one analyst feels that the new ratios will finally provide some certainty around these issues, and pave the way for banks to feel confident enough to boost dividends. Christopher Mutascio, of Stifel Nicolaus, expects PNC US Bancorp and Wells Fargo to be among the first to raise dividends and resume stock buybacks. - Jim