After a string of banking failures this year, US regulators are looking at stricter regulation to make large banks more resilient and able to absorb potential losses.
US regulators are considering raising capital requirements for large banks by as much as 20 percent, the «WSJ» (behind paywall) wrote, citing people familiar with the plans.
The changes, which could come into effect as early as this month, would hit US megabanks with big trading businesses the hardest, as well as banks depending heavily on fee income, the report said.
Financial Crisis Aftermath
Until now, banks under the Federal Deposit Insurance Act, US banks have had to hold a minimum CET 1 ratio of 4.5 percent, which could go higher based on special capital buffer requirements. Taking this into account JP Morgan's CET 1 capital requirement rises to 11.2 percent.
Currently, under Basel III, the European Central Bank instructs European systemically relevant banks to hold a Common Equity Tier 1 capital requirement of 10.7 percent, while in Switzerland financial regulator Finma, demands global systemically relevant banks to hold a minimum of ten percent Common Equity Tier 1 capital requirement.
