Next bank stress test cycle to include Basel III: U.S. Fed

WASHINGTON Tue Sep 24, 2013 2:13pm EDT

An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013. REUTERS/Jonathan Ernst

An eagle tops the U.S. Federal Reserve building's facade in Washington, July 31, 2013.

Credit: Reuters/Jonathan Ernst

WASHINGTON (Reuters) - U.S. banks must incorporate the strict new Basel III capital rules in the next set of the surveys of their financial health known as stress tests, the Federal Reserve said on Tuesday.

The central bank has adopted two so-called interim final rules, one for bank holding companies with $50 billion or more in total consolidated assets, and a second for groups with assets of $10 billion to $50 billion.

The group of bigger banks has to take Basel III into account in the next stress tests, which begins on October 1, the Fed said. For most banks in the second group, there is a one-year transition period.

The two rules are effective immediately, but could still be reviewed after a public comment period.

The Fed adopted the Basel III capital rules in July, telling banks to use more equity capital to fund their business to make them more robust following the 2007-09 credit meltdown.

The pact, which will be phased in starting next year, will force most banks to hold about three times as much top-quality capital as is required under existing rules.

(Reporting by Douwe Miedema. Editing by Andre Grenon)