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FDIC board adopts final rule recalibrating enhanced supplementary leverage ratio for GSIBs
Summary
The FDIC board adopted a joint final rule that recalibrates enhanced supplementary leverage ratio (ESLR) standards for U.S. global systemically important bank holding companies (GSIBs) and their depository subsidiaries, setting an ESLR buffer equal to 50% of a GSIB's method 1 surcharge with a 1% cap for bank subsidiaries; staff estimated a holding-company tier 1 capital reduction of roughly $13 billion and set an effective date of April 1, 2026 (early adoption option January 2026).
The Federal Deposit Insurance Corporation (FDIC) Board of Directors voted to adopt a joint final rule recalibrating enhanced supplementary leverage ratio (ESLR) standards that apply to U.S. global systemically important bank holding companies (GSIBs) and their bank subsidiaries.
FDIC staff (Ben Bosco and Catherine Wood) told the board the final rule would require both GSIBs and their bank subsidiaries to maintain a leverage buffer; a GSIB's ESLR buffer would equal 50% of its GSIB method-1 surcharge, and a modification places a cap of 1% on the bank-subsidiary buffer. The final rule also makes conforming changes to the Federal Reserve's total loss-absorbing capacity and long-term debt requirements, as proposed. Staff said the final rule is estimated to reduce aggregate tier-1 capital at the holding-company level by approximately $13,000,000,000 (just under 2%) and by a larger aggregate amount at the bank-subsidiary level; staff described constraints designed to limit capital released to external shareholders.
Staff told the board the rule aims to ensure the ESLR more often serves as a backstop to risk-based capital requirements rather than a regularly binding constraint and to mitigate disincentives that a frequently binding leverage requirement can create for low-risk, low-return activities important to market functioning (for example, U.S. Treasury market intermediation and repo financing). The agencies stated the final rule would be effective on April 1, 2026, with an option for banks to early-adopt beginning in January 2026.
Director Gould expressed support, saying the final rule helps address post-2008 discretionary policy consequences that impeded banks' ability to act as shock absorbers and that recalibration will help restore market-intermediation functions. The board then moved and approved a resolution adopting the final rule; the chair called a roll vote with board members recorded as voting 'aye' (including Jeff Gradler voting by proxy for Director Russell Vogt).
Next steps: the final rule will be published with the effective date of April 1, 2026, and an early-adoption option beginning January 2026. The FDIC and its interagency partners will coordinate implementation and any required supervisory guidance.
