Regulators Give Big Banks a (Little) Break on Capital Surcharge

By Rob Blackwell

International regulators eased back slightly on a proposed capital surcharge for the largest institutions, setting a range below the expected 3%. In a statement released Saturday by the Group of Governors and Heads of Supervision, the oversight body of the Basel Committee on Banking Supervision, regulators said the surcharge will be within a range of 1% to 2.5%, depending on a bank’s systemic importance. But regulators did leave themselves leeway to charge a higher figure if banks continue to “increase materially their global systemic importance,” saying they may levy an additional 1% surcharge in such circumstances. “The 1% added surcharge is the penalty box global regulators have erected to deter behemoths from getting even bigger,” said Karen Shaw Petrou, managing director of Federal Financial Analytics.