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Steep Leverage Ratio Requirements Will Force Banks To Rethink Their Capital Plans 

April 15, 2014

The country‚Äôs biggest banking groups will have to continue working on their capital structures to meet the stringent leverage ratio requirements laid out for them by the Federal Reserve, the FDIC and the Office of the Comptroller of the Currency on Tuesday, April 8. The banks have put in considerable effort in recent years to shore up their balance sheets so that they comply with the Basel III capital requirements, but with the financial regulators raising the bar further with new leverage ratio requirements, these banks will be forced to review their capital plans for this year as well as the next.

The newly proposed rules raise leverage ratio requirements for the eight bank holding companies (BHCs) with more than $700 billion in consolidated total assets or more than $10 trillion in assets under custody, from the currently implemented Basel III level of 3% to 5%. In addition, FDIC-insured bank subsidiaries for all these BHCs will have to maintain a leverage ratio of 6%.

Read more: Forbes

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