US big banks get breather to respond to planned capital mandates
TOP US financial regulators on Friday (Oct 20) delayed a deadline for comments on their sweeping plan to impose tighter capital rules on big banks.
The Federal Reserve, the Federal Deposit Insurance Corp and the Office of the Comptroller of the Currency said in a joint release that they would extend the comment period to Jan 16 from the original Nov 30.
The Fed simultaneously announced that it would push back the deadline for comments on a proposal to revise the capital surcharge for the eight largest banks. In addition, it has started to gather data from banks affected by the proposal. Both of these deadlines are on Jan 16.
The capital mandates proposed in July set up a pitched battle with the industry over whether the regulators’ push for financial stability would make the large lenders less competitive.
The measures would force the banks to thicken their cushions to absorb unexpected losses. Lenders with at least US$100 billion in assets would have to boost the amount of capital set aside by an estimated 16 per cent. The eight largest banks face about a 19 per cent increase, and lenders between US$100 billion and US$250 billion in assets would see as little as 5 per cent more, according to agency officials.
The plan would rope in mid-size firms such as Regions Financial Corp and KeyCorp for the kind of stringent requirements that had been reserved for the largest lenders.
The US capital reforms are tied to Basel III, an international regulatory agreement that began more than a decade ago in response to the 2008 financial crisis. The failures of Silicon Valley Bank and Signature Bank in March, followed by First Republic Bank’s collapse in May, underscored the importance of the overhaul, regulators have said.
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