Bank Capital Requirements: Federal Reserve Board Approves Final Common Equity Surcharge For U.S. Global Systemically Important Banks

Sullivan & Cromwell LLP - July 29, 2015

Last week, the Board of Governors of the Federal Reserve System approved a Final Rule (the “Final Surcharge Rule”)  establishing risk-based capital surcharges for the largest, most interconnected U.S. bank holding companies.  For these institutions, the Final Surcharge Rule implements the framework developed by the Basel Committee on Banking Supervision for assessing a common equity surcharge on global systemically important banks (“G-SIBs”) as an extension of the capital conservation buffer that can only be satisfied with Common Equity Tier 1 capital (the “G-SIB surcharge”).  G-SIBs not meeting the G-SIB surcharge requirements will face restrictions on dividends and certain executive compensation payments.