Th US Federal Reserve announced final individual capital requirements for large banks this Wednesday, after stress tests earlier this year.
If a bank dips below the total requirement it will be subject to automatic restrictions on both capital distributions and discretionary bonus payments.
The common equity tier 1 capital requirement consists of serval components; the minimum capital requirement, which is the same for each bank and is 4.5 percent; the stress capital buffer requirement, which is based in part on the stress test results and is at least 2.5 percent; and if applicable, a capital surcharge for the largest and most complex banks, which is updated in the first quarter of each year to account for the overall systemic risk of each of these banks.
The requirements will become effective 1 October.
The Fed also announced that it had changed the stress capital buffer requirement for Goldman Sachs, after the firm requested reconsideration.
By Staff
