The FDIC board today approved changes to the enhanced supplementary leverage ratio, or eSLR, standards for the largest banks as part of reforms being pursued jointly by federal banking agencies.
The final rule replaces the current 2% eSLR buffer for global systemically important banks and their subsidiaries with a buffer equal to half of the GSIB’s Method 1 surcharge. However, in a change to the rule as first proposed, the buffer would be capped at 1% for subsidiary banks. The rule is being issued jointly with the Federal Reserve and the Office of the Comptroller of the Currency.
The final rule goes into effect April 1, 2026, with the option for banks to start using it as early as January.
FDIC staff estimated that the final rule would lead to an aggregate reduction in Tier 1 capital requirements of $13 billion, or less than 2%, for GSIBs, and a $219 billion reduction, or 28%, in Tier 1 capital requirements for major bank subsidiaries.
FDIC Chairman Travis Hill said adoption of the final rule “helps address and undo the negative consequences of discretionary policy decisions made after the 2008 financial crisis.”
“These decisions impeded the ability of banks to act as shock absorbers in times of stress, particularly in key markets like the U.S. Treasury market,” Hill said. “In other words, rules like the eSLR had the ironic impact of decreasing market resilience rather than increasing it.”
In a statement, American Bankers Association President and CEO Rob Nichols called the new rule “a sensible change that will reduce bank funding costs and drive economic growth without compromising safety and soundness.”
“We look forward to working with the prudential regulators on other much-needed capital reforms, including adjustments to the Tier 1 leverage ratio and TLAC,” he said.
