The 19 largest US banks are at least $50 billion short of meeting new capital requirements under the Basel III accords, according to rules proposed by the Federal Reserve.
The biggest among them would probably need billions of dollars more by the 2019 deadline to comply fully with the rules.
Smaller US lenders are about $10 billion short of the requirements, the Fed said on Thursday.
The Fed’s proposals, which will be phased in from next year, are part of a larger package implementing the Basel III accords in the US.
Banking regulators want lenders to hold more high-quality capital, and they are taking a more stringent approach when judging the relative riskiness of banks’ assets.
In line with the international agreement, the Fed proposed that banks’ common equity relative to their risk-weighted assets should be 7 percent.
Bigger banks will need to have more capital relative to their competitors because of their importance to the financial system.
Daniel Tarullo, the Fed governor who oversees bank regulation, said that while the capital requirements were “not a sufficient condition for a strong, resilient financial system, they [were] surely a necessary one”.
Some banks will be able to calculate their needed levels of capital using internal models, subject to Fed approval.Page 1 of 2 | Next Page