WASHINGTON: The US Federal Reserve on Monday proposed a new regulatory regime for foreign banks operating in the US that could make life easier for some banks, while tightening up rules for more risky foreign firms.
The proposal, which would affect major banks like UBS , Credit Suisse, Deutsche Bank and HSBC, comes amid a broader plan by the Fed to more closely tailor banking rules in line with firms' risk profiles, report agencies.The proposed changes, which are subject to industry feedback, would relax the capital and stress testing requirements for the subsidiaries of foreign banks, but impose stricter liquidity rules on foreign lenders that rely extensively on riskier activities like short-term funding.
The Fed also said it was soliciting input on imposing stricter liquidity requirements on foreign bank branches for the first time, although it stopped short of proposing new rules.
In addition, the central bank proposed relaxing the schedule for how frequently foreign banks must submit "living wills" detailing how they could be dissolved in the event of failure. The proposal would see foreign lenders submit plans every two to three years, instead of annually, depending on their size.