On April 8 the US Federal Reserve issued its final ruling on
the enhanced supplementary leverage ratio (ESLR) for the
country's eight largest lenders. The two percent increase over
the Basel recommendation has banks considering ways to adjust
their portfolios, with the possibility of adding risk to
the US leverage ratio still just a backstop?
The final rule is not a deviation from the proposal, but is
still unwelcome and could impact banks' global competiveness.
The eight largest banks will now be required to meet an ESLR of
five percent from 2018 and subsidiaries are recommended to have
a six percent ratio.
The ratio, initially intended to be a backstop, may now be
the main inhibitor of activity, according to banking
"The Basel committee made clear...