The Federal Reserve Board published final firm-specific common equity tier 1 (CET1) capital requirements for large banks, effective 1 October, based on results from its annual stress test. The Board described the announced requirements as transitional while it considers changes to how stress test results feed into capital requirements. Each bank’s CET1 requirement comprises a 4.5 percent minimum requirement, a stress capital buffer (SCB) requirement that is at least 2.5 percent and for the largest and most complex banks an additional capital surcharge updated in the first quarter to reflect systemic risk. If a bank’s capital falls below its total requirement, automatic restrictions apply to capital distributions and discretionary bonus payments. The published requirements do not include an SCB for Morgan Stanley while the Board reviews the firm’s request for reconsideration, with a decision and final individual capital requirement expected by 30 September 2025. If the Board finalizes its April proposal to average stress test results over two consecutive years, it plans to publish revised requirements separately using averaged 2024 and 2025 results.
Federal Reserve Board 2025-08-29
Federal Reserve Board announces final individual capital requirements for large banks effective 1 October with Morgan Stanley requirement pending review
The Federal Reserve Board has finalized firm-specific common equity tier 1 (CET1) capital requirements for large banks, effective 1 October, based on annual stress test results. These requirements include a 4.5% minimum, a stress capital buffer (SCB) of at least 2.5%, and an additional surcharge for the largest banks. Morgan Stanley's SCB is pending review, with a decision expected by 30 September 2025.