The Federal Reserve Board, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency issued a final rule modifying certain regulatory capital standards to reduce disincentives for the largest and most systemically important banking organizations to engage in lower-risk activities, including intermediating in US Treasury markets. The final rule is substantially similar to the June proposal, but includes changes at the depository institution level. The rule adjusts leverage capital standards for covered bank holding companies and their depository institution subsidiaries as a backstop to risk-based capital requirements, with calibration based on each organization’s overall systemic risk. For depository institution subsidiaries, the enhanced supplementary leverage ratio requirement is capped at 1%, limiting the overall leverage requirement for these institutions to no more than 4%; conforming changes also update other requirements linked to leverage standards, including total loss-absorbing capacity and long-term debt. The agencies estimate overall capital levels will remain broadly unchanged, with an aggregate reduction of less than 2% in tier 1 capital requirements for affected bank holding companies. The final rule takes effect on April 1, 2026, and banking organizations may elect to adopt the modified standards beginning January 1, 2026.
Office of the Comptroller of the Currency 2025-11-25
US Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency finalize leverage capital backstop changes with 1% cap for bank subsidiaries
The Federal Reserve Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency issued a final rule modifying regulatory capital standards to encourage lower-risk activities by large, systemically important banks. The rule caps the enhanced supplementary leverage ratio at 1% for depository institution subsidiaries, with an overall leverage limit of 4%. The agencies anticipate a less than 2% reduction in tier 1 capital requirements for affected bank holding companies.