The heightened requirements would apply to all banks with at least $100 billion in assets and would impact the biggest and most complex banks the most.
As expected, the changes will broadly raise the level of capital that banks need to maintain against possible losses, the agencies said. While the heightened requirements apply to all banks with at least $100 billion in assets, the changes are expected to impact the biggest and most complex banks the most, they said.
"Improvements in risk sensitivity and consistency introduced by the proposal are estimated to result in an aggregate 16% increase in common equity tier 1 capital requirements for affected bank holding companies," the regulators said in a fact sheet. The industry's tier 1 common capital levels measure an institution's presumed financial stability should a recession or trading blowup occur. The biggest U.S. banks recentlya severe recession scenario while maintaining required capital levels in the Fed's latest stress test.
In response to the failure of Silicon Valley Bank in March, the proposal would force more banks to include unrealized losses and gains from certain securities in their capital ratios, as well as compliance with additional leverage and capital rules. That effectively eliminates a regulatory loophole that regional banks enjoyed; while larger firms with at least $250 billion in assets had to include unrealized losses and gains on securities in their capital ratios, regional banks won a carveout in 2019.
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