The Federal Reserve System, the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency have jointly requested public comments on a proposal to enhance capital requirements for large banks. The initiative, known as the Basel III endgame, is aimed at fortifying the banking system against future turmoil.
Proposed changes will impact banks with total assets exceeding $100 billion and are designed to better reflect underlying risks and promote consistency in risk measurement. These adjustments include a standardized capital framework for credit, market, operational, and financial derivative risks. Banks would also be required to incorporate unrealized gains and losses from certain securities into their capital ratios.
The estimated impact of the proposed rules is an aggregate 16 percent increase in common equity tier 1 capital requirements for affected bank holding companies, primarily affecting large and complex institutions. The changes are expected to take effect over a four-year period, starting July 2025.
Public comments on both proposals are due by November 30, 2023. The agencies are also seeking input on adjustments to the capital surcharge calculation for the largest and most complex banks to better align with their systemic risk profiles.
The initiative follows the banking turmoil in March 2023, which highlighted the need for stronger regulations. Community banks are not expected to be impacted by these proposals.
RELATED: Feds Crack Down: Banks Under CRA Microscope
RELATED: Regulators Aim to Slash Bank Overregulation
🔒 Get the grimiest stories delivered weekly. Subscribe free →
Browse More