Federal Deposit Insurance Corporation and other US banking agencies propose tying GSIB enhanced supplementary leverage ratio to 3 percent plus half the Method 1 surcharge

The Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation have issued a notice of proposed rulemaking to modify the enhanced supplementary leverage ratio (eSLR) standards for US bank holding companies identified as global systemically important bank holding companies (GSIBs) and their depository institution subsidiaries. The Federal Reserve is also proposing related amendments to its total loss-absorbing capacity and long-term debt requirements for GSIBs to align with the proposed eSLR approach. The proposal would recalibrate eSLR to support the supplementary leverage ratio (SLR) as a backstop to risk-based capital requirements and to address disincentives for eSLR firms to undertake low-risk, low-return activities, including US Treasury market intermediation. For a GSIB, the eSLR requirement to avoid limits on capital distributions and certain discretionary bonus payments would become the 3 percent SLR plus 50 percent of its Method 1 GSIB surcharge, replacing the current 5 percent eSLR standard; the same formula would apply to the GSIB’s depository institution subsidiaries, replacing the current 6 percent standard. Conforming changes would revise the 2 percent total loss-absorbing capacity leverage buffer and the external leverage-based long-term debt requirement to reflect the proposed eSLR change. Comments are due by August 26, 2025.