On June 25, 2025, the Federal Reserve Board (FRB) approved a joint notice of proposed rulemaking to be issued by the U.S. banking regulators – FRB, Office of the Comptroller of Currency, and Federal Deposit Insurance Corporation – to modify the enhanced supplementary leverage ratio (eSLR) for global systemically important bank holding companies (GSIBs) and their insured depository institution (IDI) subsidiaries. The proposal would result in one of the most significant rollbacks to the capital rules implemented following the 2008 financial crisis.
Under the existing rule, each U.S. GSIB must maintain an eSLR of 5%, comprised of a minimum supplementary leverage ratio of 3% plus a 2% buffer. In addition, each IDI subsidiary must maintain an eSLR of 6% percent to be deemed “well capitalized” under the prompt corrective action framework.
The proposed revision would modify the eSLR requirements for U.S. GSIBs and IDIs to 3% plus ½ of the institution’s GSIB surcharge. The stated purpose of the change is to reduce the binding nature of the leverage ratio, which could lessen impediments for institutions to engage in the intermediation of U.S. Treasury securities. At the bank holding company level, the modification would result in an aggregate decrease of tier 1 capital estimated at $9 billion or 1.4% of tier 1 capital.
At the IDI level, the modification would result in an aggregate reduction of tier 1 capital of $213 billion, or 27% of tier 1 capital. According to Fed staff, capital freed up at the IDI could be reallocated to broker-dealer affiliates, which could clear the way for expanding U.S. Treasury and intermediation activities.
Since the eSLR is incorporated in the GSIBs’ calculation of Total Loss Absorbing Capacity and Long-Term Debt requirements, the proposed modifications also would result in a reduction of these requirements by $90 billion (5%) and $132 billion (16%), respectively.
Next Steps
As the regulatory landscape evolves with the proposed rulemaking, financial institutions face new challenges—and opportunities. Forvis Mazars is here to help you stay ahead.
Our firm is prepared to help you navigate this evolving regulatory landscape. We partner with financial institutions to create tailored road maps that align with capital requirements, guiding you through operational readiness, capital planning revisions, and regulatory requirement uncertainty. Beyond planning, we provide deep-dive evaluations of your capital framework to help ensure your institution is not only compliant—but resilient.