Top US bank regulators unveiled plans for the most comprehensive capital rule reform in years, forcing major lenders to build up their financial buffers to absorb unexpected losses. The measures, released today by the Federal Reserve, Federal Deposit Insurance Corp. and the Office of the Comptroller of the Currency, call for an increase in the amount of capital banks with assets of at least $100 billion must hold, estimated at an increase of 16%.
The eight largest banks will face an increase of about 19%, while for banks with assets between 100 and 250 billion dollars the increase could be as low as 5%, according to the officials of the agency. This plan will mean mid-sized companies like Regions Financial, KeyCorp and Huntington Bancshares will have to contend with stringent requirements that were previously reserved for larger banks.
The expected US reforms are tied to Basel III, an international overhaul that began more than a decade ago in response to the 2008 financial crisis. The topic has become more urgent this year with the bankruptcies of Silicon Valley Bank and Signature Bank in March, and First Republic Bank in May. Wall Street’s biggest banks are bracing for new regulations that could wipe out billions of dollars in excess capital built up over the past decade, possibly limiting stock purchases by shareholders for years to come.