Federal Reserve Board announces the individual capital requirements for all large banks: “enough to survive a severe recession”

Following its stress test earlier this year, the Federal Reserve Board on Thursday announced the individual capital requirements for all large banks, effective on October 1. Those capital requirements ensure that the large banks tested will hold roughly $1 trillion in high-quality capital—enough to survive a severe recession and still be able to lend to households and businesses.

Large bank capital requirements are in part determined by the Board’s 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 bank, which is made up of several components, including:

• Minimum capital requirement, which is the same for each firm and is 4.5 percent;
• The stress capital buffer, or SCB, requirement, 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 G-SIBs, which is at least 1.0 percent.

The Board also affirmed the stress test results for one bank that requested reconsideration, HSBC North America Holdings Inc. The reconsideration process involved an independent group—separate from the stress testing group—that analyzed and evaluated the results. While affirming HSBC’s stress test results for this cycle, the Board also directed the staff to conduct a closer examination of issues raised in the reconsideration process to inform continuing improvements in its stress testing methodology for next year’s stress tests.

www.federalreserve.gov/newsevents/pressreleases/bcreg20210805a.htm