Today, the Federal Reserve’s and OCC’s U.S. Basel III final rule was published in the Federal Register. There are a number of substantive, technical and stylistic differences between the Federal Register version and the July 2013 draft version of the U.S. Basel III final rule. Among other things, the Federal Reserve and OCC clarified in the preamble to the Federal Register version that “subordinated debt instruments that qualify as tier 2 capital must be subordinated to general creditors, which generally means senior indebtedness, excluding trade creditors.” (emphasis added).
As the blackline comparison below indicates, the Tier 2 subordination discussion in the Federal Register version is different from the discussion contained in the July 2013 draft version of the U.S. Basel III final rule, which stated that “subordinated debt instruments that qualify as tier 2 capital must be subordinated to the claims of depositors and general creditors, as well as to the claims of trade creditors in order to qualify as tier 2 capital.”
Federal Reserve and OCC, U.S. Basel III Final Rule, 78 Federal Register 62,018 (Oct. 11, 2013) available here: http://www.gpo.gov/fdsys/pkg/FR-2013-10-11/pdf/2013-21653.pdf