Fed's new capital requirement latest fallout from 2023 banking failures

The Federal Reserve Board will require more than 30 of country’s largest banks to maintain a minimum percentage of capital in reserve, a percentage which the Fed calculated based on their complexity and whether they are considered a global systemically important bank.

The capital requirements, which take effect Oct. 1, affect 32 banks and holding companies with $100 billion or more in assets, the Fed announced in a press release Wednesday. Previously, capital requirements were only imposed on financial institutions with more than $700 billion in assets, a threshold which applied to a small number of very large banks, the Fed noted.

The move to increase capital requirements was made in response to the collapse of three mid-sized banks in 2023: Silicon Valley Bank, Signature Bank, and First Republic Bank.