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Federal Reserve Board announces individual large bank capital requirements, which will be effective on October 1

Oliver Scroop

September 7, 2020

Following its stress tests earlier this year, the Federal Reserve Board on Monday announced individual large bank capital requirements, which will be effective on October 1.

Under its framework for large banks—those with more than $100 billion in total assets—capital requirements are in part determined by stress test results, which provide a risk-sensitive and forward-looking assessment of capital needs. The below table shows the total common equity tier 1, or CET1, capital requirements for each large bank, which is comprised of several components, including:

  • Minimum capital requirements, which are the same for each firm and are 4.5 percent;
  • The stress capital buffer, or SCB, which is determined from the stress test results, and is at least 2.5 percent; and
  • If applicable, a capital surcharge for global systemically important banks, or GSIBs, which is at least 1.0 percent.

Capital buffers, such as the SCB and GSIB surcharge, are different than minimum capital requirements for each firm. The Federal Reserve supports banking organizations that choose to use their capital buffers to lend to households and businesses and undertake other supportive actions in a safe and sound manner. When using their buffers, banking organizations may make capital distributions up to prescribed limits, which include automatic limitations in the capital framework, as well as any additional limitations determined by the Board.

Also on Monday, the Board affirmed the stress test results for five firms that requested reconsideration. Those firms are BMO Financial Corporation, Capital One Financial Corporation, Citizens Financial Group, Inc., The Goldman Sachs Group Inc., and Regions Financial Corporation.

The reconsideration process involved an independent group—separate from the stress testing group—that analyzed and evaluated the results. The results were checked for errors and to ensure that the stress test models, which project the loan losses for banks, worked as intended and were consistent with the Board’s stress test framework.

As the Board has done with input gained from a variety of stakeholders and events, including its annual stress test model symposium, the Board will assess the information learned from the reconsideration process and use it to continue improving its stress testing methodology.

Bank Minimum CET1 Capital Ratio Stress Capital Buffer GSIB Surcharge* CET1 Capital Requirement
Ally Financial Inc. 4.5% 3.5% n/a 8.0%
American Express Corporation 4.5% 2.5% n/a 7.0%
Bank of America 4.5% 2.5% 2.5% 9.5%
The Bank of New York Mellon Corporation 4.5% 2.5% 1.5% 8.5%
Barclays US LLC 4.5% 5.0% n/a 9.5%
BMO Financial Corp 4.5% 6.0% n/a 10.5%
BNP Paribas USA, Inc. 4.5% 6.4% n/a 10.9%
Capital One Financial Corporation 4.5% 5.6% n/a 10.1%
Citigroup Inc. 4.5% 2.5% 3.0% 10.0%
Citizens Financial Group, Inc. 4.5% 3.4% n/a 7.9%
Credit Suisse Holdings USA, Inc. 4.5% 6.9% n/a 11.4%
DB USA Corporation 4.5% 7.8% n/a 12.3%
Discover Financial Services 4.5% 3.5% n/a 8.0%
DWS USA Corporation 4.5% 2.5% n/a 7.0%
Fifth Third Bancorp 4.5% 2.5% n/a 7.0%
The Goldman Sachs Group, Inc. 4.5% 6.6%** 2.5% 13.6%**
HSBC North America Holdings Inc. 4.5% 5.7% n/a 10.2%
Huntington Bancshares Incorporated 4.5% 2.5% n/a 7.0%
JPMorgan Chase & Co. 4.5% 3.3% 3.5% 11.3%
KeyCorp 4.5% 2.5% n/a 7.0%
M&T Bank Corporation 4.5% 2.5% n/a 7.0%
Morgan Stanley 4.5% 5.7%** 3.0% 13.2%**
MUFG Americas Holdings Corporation 4.5% 4.4% n/a 8.9%
Northern Trust Corporation 4.5% 2.5% n/a 7.0%
The PNC Financial Services Group, Inc. 4.5% 2.5% n/a 7.0%
RBC US Group Holdings LLC 4.5% 3.6% n/a 8.1%
Regions Financial Corporation 4.5% 3.0% n/a 7.5%
Santander Holdings USA, Inc. 4.5% 2.5% n/a 7.0%
State Street Corporation 4.5% 2.5% 1.0% 8.0%
TD Group US Holdings LLC 4.5% 2.5% n/a 7.0%
Truist Financial Corporation 4.5% 2.7% n/a 7.2%
UBS Americas Holdings LLC 4.5% 6.7% n/a 11.2%
U.S. Bancorp 4.5% 2.5% n/a 7.0%
Wells Fargo & Company 4.5% 2.5% 2.0% 9.0%

*The GSIB surcharge is updated annually in the first quarter.

**On September 4, this value was corrected due to an error identified by the Board. See here for more information.

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