The expectation – which depends importantly on the extent of capital arbitrage already accomplished – is that, for a given asset, the effective risk weights would decline with the more sophisticated approaches, resulting in lower total regulatory capital charges and, consequently, in a higher reported risk-weighted capital ratio.
At the same time, given different risk profiles, capital requirements almost certainly would vary more widely under the new risk-based capital ratios than under today's measure. However, banks would then presumably respond to changes in their risk-based capital ratios. For example, a bank with a relatively low risk portfolio would find that its risk-weighted capital ratio rose because its risk-weighted assets had declined.