Fed announces $200bn capital buffers to avoid financial collapse

The eight leading American banks will hold extra capital buffers totalling $200 billion under new Federal Reserve rules aimed at preventing a major financial collapse.

The Fed yesterday announced final rules that will apply to eight major banks deemed to be globally systemically important.

All but one of the banks, which include Citigroup, Goldman Sachs and Morgan Stanley, are already in compliance with the requirements, Federal Reserve officials added.

The exception is JPMorgan, which would have a current $12.5 billion capital shortfall as a result of the rules.

That however is substantially smaller than estimates of a hole of more than $20 billion that emerged last December, after the bank took steps to adjust its balance sheet.

The final draft rules set new capital requirements for the US's top bank holding companies that go beyond minimum international standards set by the Basel Committee on Banking Supervision. – Copyright The Financial Times Limited 2015