Using a sample of selected ASEAN countries, we investigate the efficiency of recently created Basel III by assessing the relationship between business cycle and bank capital buffer and portfolio risk adjustments. As opposed to new accord, we find ASEAN banks’ react pro-cyclically for capital buffer adjustments whereas behave anti-cyclically for portfolio risk-adjustment. We found that revenue diversification benefits do exist and hence, banks can shrink their insolvency risk with revenue diversity and can achieve capital savings to confront economic downturn. Our results offer some support for the Basel III agreements that banking sector may be better off with countercyclical capital buffer requirements which can help to stabilize the economy during recessions.