19.02.2014 10:29

Fed prepared rules for foreign banks

The Federal Reserve , under the Dodd-Frank Act , has established new rules for foreign banks doing business in the United States .

The regulator thus wants to limit the loss of American taxpayers in case of collapse of a foreign bank. The Fed agreed to only minor concessions , despite the fairly strong pressure .

The new rules apply only to those financial institutions whose assets exceed $ 50 billion

Among these banks can be identified uniquely Barclays, Deutsche Bank, Credit Suisse, and the other famous names . Now they , along with the American giants will undergo annual stress tests , have certain capital requirements and debt load .

So now the largest financial companies in the world , will likely be forced to raise new capital . Thus, according to preliminary estimates , for example , Deutsche Bank will need to raise about $ 7 billion , as the bank generally works with zero capital , relying only on the parent company . However, the whole thing has a downside : worsen competition from non-US banks. For them to increase the cost of borrowing will increase , which will lead either to an increase in interest rates for customers or profitability to fall – one of two such opinion was expressed by independent experts.

It is worth noting that the new rules will still be amended , as some contentious issues remain under development. Furthermore, the rules do not take effect in 2015, as previously planned, but only in 2016 Another interesting point is that , if necessary, foreign banks will not be able to take advantage of the Fed’s discount window , as they did after the collapse of the bank Lehman Brothers.