* Foreign banks must put all units in one holding company
* Same capital requirements as for US holding companies
* Rules are for banks with more than $50 bln global assets
* Industry would have until end-March to comment
By Emily Stephenson and Douwe Miedema
WASHINGTON, Dec 14 (Reuters) – The U.S. Federal Reserve will
vote on Friday on whether to propose rules to subject foreign
banks to tighter capital and liquidity requirements, to protect
taxpayers from having to bail out foreign banks.
The plan would force foreign banks to subsume all their
subsidiaries under one U.S. holding company, subject to the same
capital standards as U.S. holding companies, and the banks will
also need to hold liquidity buffers.
“All U.S. intermediate holding companies would be subject to
the same risk-based capital and leverage standards applicable to
U.S. bank holding companies,” the Fed said.
The proposal was flagged in some detail by Fed Governor
Daniel Tarullo last month, who said regulators remained wary of
the risks posed by big banks that do business globally, and are
prepared to tighten the rules as a precaution.
Industry groups are concerned the rules will make doing
business in America more expensive, but the Fed said that while
extra capital and liquidity buffers could “incrementally” boost
costs, it would also make banks more stable.
Deutsche Bank, Germany’s flagship lender, is
likely to be most affected after it overhauled its U.S.
subsidiary Taunus to avoid having to inject billions of dollars
of capital to meet Dodd-Frank financial reforms.
And the UK’s Barclays has restructured part of its
U.S. operations and may have to shift funds around to meet
stricter requirements for parts of its business, though it is
likely to be less affected than Deutsche.
If the U.S. central bank’s Board of Governors votes to
release the rules later on Friday, industry groups will have
until the end of March to submit comments.
If approved, regulators will begin enforcing the rules –
which are generally for foreign banks with total global assets
of $50 billion or more – in July 2015.
Foreign banks with U.S. assets of $50 billion or more would
need to maintain a 30-day buffer of highly liquid assets, and
conduct internal tests of their liquidity levels.
Banks with fewer U.S. assets would only be required to
report the results on the liquidity tests.
The proposed rules would also limit the credit exposure of a
foreign bank to a single counterparty to 25 percent of
regulatory capital. Banks would need to set up risk committees,
and be subject to U.S. stress tests.
The Fed said approximately 107 foreign banking organizations
would be subject to the proposal, and that it expected about 25
intermediate holding companies to be set up.
