The Federal Reserve today announced the final individual capital requirements for all large banks, effective Oct 1. Large bank capital requirements are informed by the Fed’s stress test results.
According to the Fed, each bank’s common equity tier 1 capital requirement is made up of several components, including:
- The minimum capital requirement, which is the same for each bank and is 4.5%.
- The stress capital buffer requirement, which is based in part on the stress test results and is at least 2.5%.
- 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 apply to more than 30 banks.
