U.S. regulators propose rule to ease leverage rule for custody banks

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WASHINGTON (Reuters) - U.S. banking regulators on Thursday proposed a rule that would allow custody banks to exclude deposits with central banks from a stringent capital requirement.

The relief, prescribed by a bank deregulation bill passed by Congress in May, would apply to Bank of New York Mellon, Northern Trust and State Street, as firms “predominantly engaged in custody, safekeeping, and asset servicing activities.”

When finalized, the rule would allow those banks to exclude such central bank deposits from the supplementary leverage ratio, which directs each bank to hold more capital against its assets.

Reporting by Pete Schroeder; Editing by Paul Simao