On November 25, the Fed, OCC and FDIC issued a final rule modifying the enhanced supplementary leverage ratio (eSLR) standards for U.S. global systemically important bank (GSIB) holding companies and their depository institution subsidiaries. As previously covered by InfoBytes, the agencies proposed these changes in June to ensure the leverage standard serves as a backstop to risk-based capital requirements and reducing disincentives for large banking organizations to engage in low-risk activities, such as Treasury market intermediation.

The final rule recalibrated the eSLR for GSIB holding companies and their subsidiaries based on systemic risk. For depository institution subsidiaries of holding companies, the rule introduced a new cap — absent from the proposed version — limiting the eSLR standard to 1 percent, resulting in an overall maximum requirement of 4 percent. The agencies projected the rule would reduce tier 1 capital requirements for affected holding companies by less than 2 percent, with larger reductions at the depository institution level. The final rule will take effect April 1, 2026, but banking organizations may elect to adopt the standards beginning January 1, 2026.

In a statement accompanying the final rule, Fed Board Governor Barr dissented, warning the rule could weaken capital backstops and increase systemic risk, while Governor Cook also opposed the rule, citing concerns over reduced capital at bank subsidiaries and financial stability. In contrast, Governor Miran supported the rule, arguing the leverage ratio should not ordinarily be a binding constraint, and suggested future reforms consider excluding Treasurys and central bank reserves from the leverage ratio denominator.