FOR IMMEDIATE RELEASE
May 18, 2021
CONTACT: Victoria Rosengarten, 816/881-2308
KANSAS CITY, MISSOURI – The Federal Reserve Bank of Kansas City today released the December 31, 2020 results from its semiannual Bank Capital Analysis (BCA), which provides an objective and data-based approach to judging capital strength across the banking industry. The BCA presents leverage ratios for individual U.S. global systemically important banks (G-SIBS), non-U.S. G-SIBs, and three other groups of institutions in the United States: large, regional and community banking organizations.
As of December 31, 2020, the weighted average supplementary leverage ratio (SLR), also known as the Basel III leverage ratio, for U.S. G-SIBs was 7.25 percent, up 84 basis points from December 31, 2019. This increase is primarily attributed to the Federal Reserve’s temporary capital relief that permitted firms to exclude U.S. Treasury securities and deposits held at Federal Reserve Banks from the leverage exposure measure of the SLR, which is designed to allow for continued financial market intermediation as balance sheets expanded due to COVID-19 relief efforts. This temporary relief resulted in total leverage exposure declining by a combined $2.4 trillion for the U.S. GSIBs._ Without the temporary SLR exclusion, the weighted average SLR for U.S. GSIBs would have been 110 basis points lower at 6.15 percent. The temporary exclusion expired on March 31, 2021. The weighted average Basel III leverage ratio across foreign G-SIBs declined over this period and remains lower than that of U.S. GSIBs._
Over this same timeframe, U.S. G-SIBs’ weighted average tier 1 leverage ratio declined 52 basis points to 7.5 percent, though their tier 1 risk-based capital ratios increased 65 basis points to 14.4 percent. U.S. G-SIBs’ leverage ratios remain below leverage capital ratios for large (9.3 percent), regional (9.1 percent) and community (10.0 percent) banking organizations. Tier 1 leverage ratios at large, regional and community banking organizations declined by 80, 72 and 82 basis points, respectively, due to balance sheet growth driven by participation in COVID-19 stimulus programs.
As the regional headquarters of the nation’s central bank, the Federal Reserve Bank of Kansas City and its branches in Denver, Oklahoma City and Omaha serve the seven states of the Tenth Federal Reserve District: Colorado, Kansas, Nebraska, Oklahoma, Wyoming, northern New Mexico and western Missouri, home to more than 730 regional and community banks.
Total leverage exposure, the denominator of the SLR, includes certain off-balance sheet exposures in addition to on-balance sheet assets.
Jurisdictions in other countries have also temporarily permitted the exclusion of central bank deposits from the Basel III leverage ratio, but the exclusion is not reported similarly across foreign GSIBs and the effective dates differ.