New York: U.S. regulators are reportedly preparing to implement one of the most significant reductions in bank capital requirements in more than a decade, according to a report by the Financial Times. The move, expected within the coming months, could reshape the way major banks operate and engage with financial markets.
Citing sources familiar with the discussions, the Financial Times stated that regulators are preparing to lower the Supplementary Leverage Ratio (SLR)—a key requirement that mandates large banks to maintain an additional buffer of loss-absorbing capital.
While Reuters was unable to independently verify the report, the potential regulatory shift comes amid growing optimism within the U.S. banking industry. Financial institutions have been urging regulators to ease capital burdens, especially on low-risk assets like U.S. Treasury securities, following recent volatility in the Treasury markets.
Implications for the Banking Sector
Should the proposed changes be implemented, they could reduce the amount of capital that banks must hold against their balance sheets, freeing up funds for increased lending and investment activity. More significantly, a relaxed SLR could incentivize banks to re-enter and strengthen their role in the U.S. Treasury market—a space that has seen turbulence due to liquidity challenges and limited intermediation.
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The Federal Reserve, the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) have previously signaled that the SLR warrants reconsideration. Regulators are reportedly evaluating revisions to the rule’s underlying formula that may offer targeted relief for institutions holding assets deemed extremely safe, such as U.S. Treasuries.
Lack of Official Confirmation
Despite mounting speculation, the Federal Reserve, OCC, and FDIC declined to comment on the Financial Times report. Reuters also noted that requests for comment from the agencies had not yet received a response.
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If enacted, this overhaul would represent a significant regulatory pivot aimed at enhancing market functionality while easing operational constraints on some of the nation’s largest financial institutions.
