March 2026 Capital Framework NPRs

Fed / FDIC / OCC — Published March 19, 2026 — Comments due June 18, 2026 — AI-generated summary; may contain errors. Toggle sources to verify against the NPR text.
Cat I/II (GSIBs)
-4.8% CET1 Memo p.3-4
Cat III/IV ($100B+)
-5.2% CET1 Memo p.3-4
Smaller Banks
-7.8% CET1 Memo p.3-4
vs. July 2023 NPR
+19% → -4.8% NPR1 p.510
Summary
Detail

What Is This?

Three joint NPRs to modernize the US bank capital framework. Together with recent stress test and leverage ratio reforms, they represent the most comprehensive capital rule revision since the post-crisis era. The July 2023 B3E NPR is rescinded. NPR1 p.14

NPR 1: Expanded Risk-Based Approach NPR 1
Fed / FDIC / OCC — 1,241 pages — Cat I/II mandatory; optional for all others NPR1 p.18
  • Structure: Single set of risk-based ratios replaces dual stack
    • Advanced approaches eliminated; no output floor NPR1 p.24 NPR1 p.29
  • Credit risk: LTV-based risk weights across asset classes
    • Resi RE: 20-70% (non-CF) / 30-105% (CF) by LTV NPR1 p.70 NPR1 p.71
    • IG corporate: 65% (vs 100% today); broader eligibility via internal ratings NPR1 p.32 NPR1 p.83
    • Retail: 45% transactors / 75% regulatory retail NPR1 p.80
  • Operational risk: Standardized BIC replaces AMA NPR1 p.26
    • 70% downscaling for investment mgmt, custody, non-lending treasury NPR1 p.204
    • ILM not included (set to 1) NPR1 p.196
  • Market risk (FRTB): ES replaces VaR NPR1 p.226
    • Full NMRF diversification; IMA/SA diversification recognized; IMA cap NPR1 p.376 NPR1 p.229-230 NPR1 p.231-232
    • PLA test: K-S only (Spearman removed); 3-year transition NPR1 p.536 NPR1 p.284
  • CVA risk: BA-CVA / SA-CVA; client-facing derivatives exempted NPR1 p.435 NPR1 p.439
  • Capital: MSA deduction eliminated; all MSAs at 250% RW NPR1 p.13 NPR1 p.38
NPR 2: GSIB Surcharge NPR 2
Fed only — ~130 pages — 8 US GSIBs
  • Coefficients: One-time /1.2 reduction (~17%) NPR2 p.18
    • Annual GDP indexing going forward to prevent score drift NPR2 p.19
  • STWF fix: RWA denominator removed; recalibrated to 20% of M2 (was ~30%) NPR2 p.26 NPR2 p.28-29
  • Averaging: 9 indicators shift from year-end PIT to daily/monthly averages NPR2 p.31-32
  • Granularity: 10bp surcharge increments (from 50bp); 20bp score bands NPR2 p.39
  • Impact: Avg surcharge −40bps; aggregate −$23B (−10%) NPR2 p.79-80
NPR 3: Standardized Approach NPR 3
Fed / FDIC / OCC — ~436 pages — Cat III/IV + smaller banks
  • Risk weights: Targeted reductions for core lending
    • Resi mortgages: LTV-based 25-75% (non-CF; currently flat 50%) NPR3 p.32
    • Corporate: 95% (from 100%); other assets incl. retail: 90% NPR3 p.36
  • Capital definition: MSA deduction eliminated; AOCI mandatory for Cat III/IV NPR3 p.128 NPR3 p.119
    • AOCI 5-year phase-in (+3.1% CET1 long-run) NPR3 p.21 NPR3 p.142-143
  • Securitization: SEC-SA replaces SSFA; floor 15% (from 20%) NPR3 p.88
  • Impact: Up to $1.26T balance sheet capacity released NPR3 p.177
Related Reforms (Context)
Already proposed or finalized separately
  • Stress testing (Oct 2025): Reduces GMS + op risk projected losses to avoid double-counting with NPR 1 → −2.4% CET1 for Cat I/II Memo p.7-8 Memo p.10
  • eSLR (Nov 2025): Finalized; reinforces leverage as backstop → combined Tier 1 −6.0% for Cat I/II Memo p.5
  • CBLR (separate): Proposed 9% → 8% NPR3 p.123-125

Aggregate CET1 Impact

ComponentCat I/IICat III/IVSmaller Banks
Revised Standardized / RWA changes—−6.1%−7.8% Memo p.12
AOCI requirement—+3.1% NPR3 p.142-143—
Basel III NPR (expanded approach)+1.4% NPR1 p.502 Memo p.8——
GSIB surcharge NPR−3.8% Memo p.8——
Proposed stress test changes−2.4% Memo p.10−2.2%—
Total−4.8% Memo p.3-4−5.2% Memo p.3-4−7.8% Memo p.12

Key Themes vs. July 2023 NPR

Overall Calibration
  • Impact flipped: 2023 would have raised Cat I/II CET1 ~19%; this package reduces it 4.8% NPR1 p.510
  • Output floor dropped (was 72.5% of standardized RWA) NPR1 p.29
Credit Risk
  • Resi RE risk weights ~20pp lower across all LTV buckets NPR1 p.70
  • IG corporate eligibility broadened: ~53% qualifies (was public-IG only) NPR1 p.32 NPR1 p.83
  • MSA deduction eliminated entirely (was threshold-deduction) NPR1 p.13 NPR1 p.38
  • SFT minimum haircut floor removed NPR1 p.534
  • Securitization p-factor halved (0.5 vs 1.0) NPR1 p.162
Operational Risk
  • ILM removed (ILM = 1); was controversial NPR1 p.196
  • 70% downscaling for IM/IS/treasury — not in 2023 or Basel NPR1 p.204
Market Risk & CVA
  • Full NMRF diversification; IMA/SA diversification recognized; IMA cap NPR1 p.376 NPR1 p.229-230 NPR1 p.231-232
  • Spearman PLA test removed; 3-year transition (was immediate) NPR1 p.536 NPR1 p.284
  • CVA: client-facing derivatives exempted (~9% CVA RWA cut) NPR1 p.439 NPR1 p.537
GSIB Surcharge
  • Average surcharge −40bps via coefficient recalibration + STWF fix NPR2 p.79-80
Scope & Structure
  • New standalone standardized approach NPR for non-Cat I/II banks (wasn't in 2023) NPR3 p.20
  • Cat III/IV no longer in scope of expanded approach (separate, simpler treatment) NPR1 p.18

Key Departures from Basel Standards

More Favorable than Basel
  • No output floor (Basel: 72.5%) NPR1 p.29
    • Wouldn't bind anyway; removes key 2023 opposition point
  • MSA: 250% RW, no deduction (Basel: deduct above threshold) NPR1 p.13 NPR1 p.38
    • Banks can scale servicing without CET1 deduction cliffs
  • Op risk: 70% downscaling for IM/IS/treasury (Basel: none) NPR1 p.204
    • Huge for custody banks & asset managers; reflects ~1/3 op loss ratio for these activities NPR1 p.204
  • Market risk: IMA/SA + NMRF diversification, IMA cap (Basel: none) NPR1 p.229-230 NPR1 p.376 NPR1 p.231-232
    • Billions in RWA savings for large dealers; prevents punitive charges for illiquid risk factors
  • PLA test: K-S only + 3-year transition (Basel: K-S + Spearman, immediate) NPR1 p.536 NPR1 p.284
    • Fewer false failures; banks get runway to improve models without capital penalty
  • CVA: Client-facing derivatives excluded (Basel: included) NPR1 p.439
    • ~9% CVA RWA cut; benefits client clearing desks (fully collateralized, daily margin) NPR1 p.537
US-Specific Design Choices
  • No external ratings (Dodd-Frank 939A)
    • Internal IG/spec grades instead of S&P/Moody's; avoids rating-downgrade cliff effects NPR1 p.83
  • Op risk BI: 2 components, not Basel's 3; losses in BI directly NPR1 p.208-209
    • GAAP compatibility; allows more netting within components
  • Equity SRWA: 300%/400%/600% (Basel: 250%/400%/1,250%) NPR1 p.779
    • 600% vs 1,250% for leveraged investment firms — benefits PE/VC holdings
  • Statutory RE treatments retained (HVCRE 150%, pre-sold 50%)
    • Congressional mandates override Basel calibration

Timeline

March 19, 2026
NPRs published
June 18, 2026
Comment period closes
~H2 2026 / H1 2027
Final rules expected (agencies have not committed to timeline)
Illustrative: Jan 1, 2027
NPR 1 & 3 effective date (RWA changes: no phase-in; AOCI: 5-year phase-in) NPR3 p.20 NPR3 p.21
Two full quarters after final rule
GSIB surcharge effective (NPR 2); pro-rata transition for averaging data NPR2 p.64
~2030-2032
PLA test 3-year transition ends (NPR 1); AOCI fully phased in (NPR 3) NPR1 p.284 NPR3 p.21

Source Documents

DocumentPagesLink
Press Release—federalreserve.gov
Fact Sheet4PDF
Board Memo14PDF
NPR 1: Expanded Risk-Based Approach~1,241PDF
NPR 2: GSIB Surcharge~130PDF
NPR 3: Standardized Approach~436PDF
Federal Register Notice—PDF