WASHINGTON Regulators have told Citigroup that it will no longer be hit with the highest capital buffer of 2.5% as a systemically important institution, leaving just JPMorgan Chase & Co. as the only U.S. institution facing the toughest surcharge.
The new requirements were detailed as part of a list released Monday by the Financial Stability Board, which identified the globally systemically important banks, or G-SIBs. Like last year, it identified 8 U.S. firms in that category, which must face a capital surcharge between 1% and 2.5% starting in 2016.
However, the FSB lowered the proposed surcharge for two U.S. institutions: Citi and Bank of New York Mellon. Citi saw its surcharge fall to 2% from 2.5%, while Bank of New York similarly saw a drop to 1% from 1.5%. The rest of the six U.S. firms maintained their previous capital thresholds.
Representatives for Citi and Bank of New York Mellon declined to comment.
Meanwhile, Germany's Deutsche Bank was the only foreign bank to also have its surcharge capital requirement lowered to 2%, while French firm Group Credit Agricole crept to a higher bucket and will now face a tougher buffer of 1.5%.
British HSBC Holdings PLC was the only other global firm to face the toughest surcharge alongside JPMorgan.
The international regulatory body said changes across the list reflected "combined effects of data quality improvements, changes in the methodology and changes in underlying systemic importance."
Bank of America, Goldman Sachs, and Morgan Stanley will all still face a 1.5% capital buffer, while State Street and Wells Fargo kept their status as having the lowest charge of 1%.
Firms identified as G-SIBs must hold between 1% to 2.5% in extra capital. Regulators also have at their disposal an even higher surcharge of 3.5%, but that is largely seen as a deterrent to keep banks from becoming even larger and increasing their systemic footprint.
The surcharge will not officially kick in for two years, and even then it will only apply to those firms designated in November 2014 potentially allowing firms to be added or dropped off the list of G-SIBs.
U.S. regulators have previously indicated plans to issue a proposal to implement the global capital surcharges by the end of this year.
Globally, the stability board added one more firm to its list of 29 G-SIBs: Industrial and Commercial Bank of China Ltd., making it the second Chinese firm to be included.
Donna Borak is the Federal Reserve reporter for American Banker.
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