Change in Tier 1 Leverage Capital Standard for Bank Holding Companies
July 22, 1998
Circular No. 11075

To All Bank Holding Companies in the Second Federal Reserve District:

The following is from a statement by the Board of Governors of the Federal Reserve System:

The Federal Reserve Board has issued a final rule amending the Tier 1 leverage capital standard for bank holding companies.

The rule is effective June 30, 1998.

The amendment to Regulation Y establishes a minimum ratio of tier 1 capital to total assets (leverage ratio) of 3.0 percent for bank holding companies that either are rated composite"1" under the BOPEC rating system or have implemented the Board's risk-based capital market risk measure.  The minimum leverage ratio for all other bank holding companies is 4.0 percent.  Bank holding companies are expected to maintain higher-than-minimum capital ratios if they have supervisory, financial, operational, or managerial weaknesses, or if they are anticipating or experiencing significant growth.

The amendment to Regulation Y, as published in the Federal Register of June 4 is available as a file (pdf - 20kb). Questions on this matter may be directed, at this Bank, to Stefan Walter, Assistant Vice President.