Federal Deposit Insurance Corporation, Federal Reserve Board and Office of the Comptroller of the Currency consult on systemic risk based enhanced supplementary leverage ratio for the largest banks

The Federal Deposit Insurance Corporation, Federal Reserve Board and Office of the Comptroller of the Currency requested comment on proposed changes to regulatory capital standards that would adjust certain leverage capital requirements for the largest and most systemically important banking organizations. The proposal is intended to ensure leverage requirements operate as a backstop to risk-based capital requirements without discouraging lower-risk activities such as US Treasury market intermediation. The proposal would modify leverage standards by setting the enhanced supplementary leverage ratio (eSLR) for both bank holding companies and their depository institution subsidiaries based on a banking organization’s overall systemic risk. The agencies expect overall capital levels to generally remain the same, with aggregate Tier 1 capital standards for affected bank holding companies reduced by less than 2%; while some depository institution subsidiaries could see larger reductions, that capital generally would not be available for distribution to external shareholders due to restrictions at the bank holding company level. Conforming changes would also be made to other requirements linked to the eSLR, including total loss-absorbing capacity and long-term debt requirements. Comments are due by August 26, 2025.