NEW YORK ( TheStreet) -- Large-cap banks finished mixed in Tuesday trading, as the Federal Reserve approved final capital rules under Basel III, but warned that banks considered systemically important or too-big-to-fail should expect tougher capital requirements.

The new rules require banks to hold a minimum tier 1 capital ratio of 7%, a requirement that 95% of the banks already meet, according to the regulator.

But big banks might be required to build more capital as measured by the supplementary leverage ratio -- a measure that looks at capital held against total assets as opposed to risk-weighted assets that can be more easily manipulated. The minimum ratio stipulated by Basel III is 2%, which regulators have said may be too low.

The Fed said it is working on three other rules including requiring banks to hold a minimum amount of long-term debt and requiring companies overly reliant on wholesale funding to hold more capital.

Shares of JPMorgan Chase ( JPM - Get Report) rose 1.3%.

Shares of Bank of America ( BAC - Get Report), Citigroup ( C - Get Report) and Wells Fargo ( WFC - Get Report) finished modestly lower.

Keycorp ( KEY), Fifth Third Bancorp ( FITB) and SunTrust ( STI) also rose by more than 1%.

The final rules went easier on the mortgage industry. For instance, banks would not be required to hold more capital against mortgages that have a downpayment of less than 20%, as originally proposed.

The favorable ruling on mortgages should benefit First Horizon ( FHN - Get Report) and TCF ( TCB), which would have taken a knock under the previous proposal's more stringent measure, according to Barclays Capital analyst Jason Goldberg. First Horizon was a notable winner, with shares rising more than 4%

Community banks also got a break with the regulatory capital treatment of certain unrealized gains and losses and trust preferred securities.

In other news, Wells Fargo was downgraded Tuesday morning by KBW analysts to market perform, on concerns a slowdown in refinancing activity will hit the bank's earnings harder than the market appears to be pricing in at the moment.

Citigroup analyst Keith Horowitz said estimates for Goldman Sachs ( GS) and Morgan Stanley ( MS) need to be lowered after a rough trading month in June .

-- Written by Shanthi Bharatwaj New York.

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