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Beyond Basel: Fed Asks for Higher Capital Surcharge 

December 11, 2014
Matthew Heller, CFO

As part of its effort to avoid “too big to fail” scenarios, the U.S. Federal Reserve has proposed levying risk-based capital surcharges on the eight largest U.S. banks, surcharges that go beyond the requirements of Basel III.

Under the Fed’s proposal, a firm identified as a global systemically important bank would be subject to a surcharge ranging from 1.0% to 4.5% of its total risk-weighted assets. The maximum surcharge set under the global Basel III rules is 2.5%.

According to Fortune, JPMorgan Chase likely will bear the brunt of the new rule. The bank had about $163 billion in top-quality capital, or 10.1% of risk-weighted assets, as of the end of the third quarter, meeting the Basel III standard. But in order to meet the new 11.5% ratio indicated by the Fed for the highest-risk group, it would need more than $20 billion in additional capital.

Read more: CFO

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