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 U.S. regulators proposed rules in July to limit the extent to which
banks may fund their activities through debt, part of the Basel III
global agreement to boost banks' capital levels.
In January, the international group revised the way it requires
banks to calculate whether they are meeting the leverage
requirements. That latest version is seen as somewhat tougher on
banks than the method U.S. regulators initially proposed for firms
operating in the country.
Federal Reserve Governor Daniel Tarullo plans to tell a U.S. Senate
Banking Committee hearing that the final U.S. rules would incorporate the changes agreed on by the Basel group.
"These changes would strengthen the ratio in a number of ways,
including by introducing a much stricter treatment of credit
derivatives," he said in prepared remarks obtained by Reuters.
Global regulators reached the Basel accord to make banks safer after
the 2007-2009 financial crisis. Capital rules force banks to fund a
minimum amount of business through equity, rather than debt.
Leverage ratios are calculated as a percentage of total assets,
unlike some capital ratios that consider the riskiness of bank
assets.
U.S. regulators have proposed a 6 percent leverage ratio for the
biggest banks, twice as much as called for under the global
agreement. They also differed in how they required banks to
calculate their leverage ratios.
The Basel committee tweaked its rules in January for calculating the
leverage ratio. European banks saw that as easing some of the
requirements on them.
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But that revised calculation method is tougher than the U.S.
proposal in its approach to credit derivatives, Comptroller of the
Currency Thomas Curry plans to tell the Senate committee on
Thursday.
It also differs from the U.S. version in its treatment of certain
off-balance sheet commitments, Curry said in prepared remarks posted
on the committee's website.
"Our preliminary analysis suggests that, in the aggregate, the final
Basel standards will generate a larger measure of exposure — and
will therefore be more stringent — than the current and proposed
U.S. standards," Curry said.
Bank groups have speculated about whether U.S. officials would tweak
their proposal to match the Basel rules. Tarullo said the U.S. final
rules would "incorporate" the international revisions, but did not
elaborate.
(Reporting by Emily Stephenson; editing
by Peter Cooney and Mohammad Zargham)
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