NEW YORK ( TheStreet) -- Proposed leverage capital rules for large banks may hit Goldman Sachs (GS - Get Report) and Morgan Stanley (MS - Get Report) the hardest, according to Citigroup analyst Keith Horowitz.
Federal regulators on July 9 proposed new leverage capital requirements for the nation's banks, just one week after the Federal Reserve finalized its rules to implement the Basel III capital requirements.
The large banks have for several years been on a path to full compliance with Basel III, with most reporting estimated June 30 Basel III Tier 1 common equity ratios at or near the levels that will be required when the rules are fully implemented in January 2019.
But things are not so simple for the big banks, because of federal regulators' new requirements and the added complication of the Basel Committee's proposed changes for ratio calculations.The U.S. regulators have proposed U.S. bank holding companies with total assets of at least $700 billion or at least $10 trillion in assets under custody, be required to maintain supplementary Basel III Tier 1 leverage ratios of 5%, with their bank subsidiaries being required to maintain minimum supplementary Basel III Tier 1 leverage ratios of 6% in order to be considered well-capitalized. The proposed rules affect the following U.S. holding companies and their bank subsidiaries:
- JPMorgan Chase (JPM - Get Report)
- Bank of America (BAC - Get Report)
- Citigroup (C)
- Wells Fargo (WFC - Get Report)
- Goldman Sachs (GS - Get Report)
- Morgan Stanley (MS - Get Report)
- State Street (STT)
- Bank of New York Mellon (BK)
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