Thesenewrequirementsincludethecreationofacapitalconservationbufferabovetheminimums, which ifbreachedwillrestrictfirms' ability to pay dividendsorbuy backstock.
They will have to add to that a "counter cyclical" capitalconservationbuffer of 2.5%, meaning capital reserves will in the coming years have to represent 7% of their loans and investments.
As part of the package of new standards, banks will be required to increase their minimum common equity requirement from 2% to 4.5%, and will additionally have to hold a capitalconservationbuffer of 2.5%, "to withstand future periods of stress, " the Basel Committee said in a press release.