Basel III Creating Headaches for S corp Banks

In the article, ” Basel III Creating Headaches for S corp Banks” in the American Banker, Mr. Kennedy along with several s corp bank members discusses how the Basel III-related dividend structure could make it harder for more than 2,000 banks with sub-s corporation tax status to attract investors. The rules will require banks to hold more capital, and failure to do so would prompt a ban on dividend payments. That risk would be especially troublesome for banks structured as S corporations, where shareholders receive dividends to pay taxes on company earnings. If an S Corp bank is profitable but is barred from paying the tax distribution because of low capital levels, then its shareholders are responsible for paying taxes out of pocket. This could put additional strain on S Corp banks and their shareholders.

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