US Federal Reserve Board Issues G-SIB Surcharge Final Rule

On July 20, 2015, the US Board of Governors of the Federal Reserve System issued a final rule under Section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act requiring all US bank holding companies with $250 billion or more in consolidated total assets or $10 billion or more in consolidated total on-balance sheet foreign exposures to annually calculate their systemic importance using the methodology in the final rule. BHCs that meet the "G-SIB threshold" will be required to hold additional common equity tier 1 capital (the "G-SIB surcharge") as an addition to the capital conservation buffer under the Federal Reserve's minimum risk-based capital requirements. Eight US firms are currently expected to qualify as G-SIBs under the final rule. Similar to the proposed rule, under the final rule, estimated surcharges for the eight G-SIBs range from 1.0 to 4.5 percent of each firm's total risk-weighted assets. Failure to meet the G-SIB surcharge will result