Fed Adopts Foreign-Bank Rule

New standards approved, requiring big foreign banks to increase capital held in the U.S. Borrowing costs may rise as a result.

The Federal Reserve approved new standards for foreign banks that will require the biggest to hold more capital in the U.S., joining other countries in erecting walls around domestic financial systems.

Banks with $50 billion of assets in the U.S. will have to meet the standard under a revised rule approved yesterday, which raised the threshold from $10 billion proposed in 2012. The central bank left out two controversial elements of the original proposal, saying those were still being developed.

France’s Natixis and Rabobank Groep of the Netherlands may benefit from the change in the threshold for the holding company requirement, according to data compiled by Bloomberg.

Deutsche Bank, Barclays, Zurich-based Credit Suisse Group AG, and other foreign firms that engage mostly in securities trading in the U.S. are the most affected by the new rules because they rely on wholesale funding in the country for their dollar needs. London-based HSBC Holdings Plc, Spain’s Banco Santander SA, and other lenders that focus on retail banking in the U.S. depend on deposit funding more and already need to abide by domestic regulations on capital and liquidity.

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