Proposed changes to the U.S. capital rules are likely neutral for the big, globally systemically important banks (GSIBs), says Fitch Ratings in a new report.
U.S. GSIBs will likely not see any meaningful capital relief from proposed amendments to capital rules under the comprehensive capital analysis and review (CCAR) stress tests, the report says.
The proposed new CCAR rules include the introduction of a stress capital buffer and a stress leverage buffer.
“The new capital rules would also allow for more flexibility and preservation of capital under recessionary scenarios,” the report says.
Overall, the proposed new rules, which should be in place for the 2019 testing cycle, should be credit neutral, the report says, “as the CCAR stress tests’ core elements remain.”
karge U.S. banks that do not qualify as GSIBs should see a modest reduction to capital requirements, according to the report. Initially, this would not have any rating impact, but could become considered a negative over time.
“The ultimate ratings impact will depend on how these domestic systemically important financial institutions (SIFIs) respond to potentially looser regulatory requirements,” the report says. “Fitch believes that higher capital returns resulting in lower capital levels are largely a credit negative.”