US And European Banks Gear Up For Basel III Requirements

The eight biggest U.S. banks will need to hold twice as much equity capital as required globally under a new rule launched by U.S. regulators on July 9, intended to protect taxpayers from any future costly bailouts.

Leverage Ratio Rules

The rule, launched by the country’s three main banking regulators, would impose a so-called leverage ratio—a hard cap on how much banks can borrow to fund their business—requiring them to hold equity capital equal to 6 percent of total assets.

According to Citi Research, although Basel 3 leverage requirements do not have to be met until January 1, 2018, analysts will hold a conservative view on European banks until they can measure CRD4...