Banks fear G-Sib tweak will increase capital volatility
Fed proposal would raise capital surcharge in 10bp increments
A US Federal Reserve proposal intended to reduce cliff effects in capital requirements is drawing criticism from senior bankers, who say it will instead subject them to “death by one thousand cuts”.
The proposed change, part of the Fed’s Basel III endgame package of regulations, would see the capital surcharge for US global systemically important banks (G-Sibs) increase in increments of 10 basis points, rather than the current 50bp.
While this is aimed at reducing steep drops when G-Sibs move
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