The U.S. Federal Reserve Board is delaying adoption of a rule that would constrain the composition of tier 1 capital for bank holding companies (BHCs).

The Fed said Tuesday that “in light of continued stress in financial markets and the efforts of BHCs to increase their overall capital levels”, it is delaying implementation of new limits on the inclusion of trust preferred securities and other restricted core capital elements in tier 1 capital of bank holding companies until March 31, 2011.

The new limits were scheduled to take effect on March 31 of this year in compliance with a final rule adopted in 2005. As a result, all BHCs may include cumulative perpetual preferred stock and trust preferred securities in tier 1 capital up to 25% of total core capital elements until 2011.

“The delay will further the Board’s efforts, as well as the efforts of the other Federal banking agencies and the U.S. Department of the Treasury, to respond to the current financial situation,” it said.