The postponement will give banks more flexibility on how they meet their capital requirements. Specifically, banks will be allowed to continue to include cumulative perpetual preferred stock, trust preferred securities and minority interests up to a level of 25% in core capital. The change, which was set to be implemented on March 31, would have capped issuance levels at 15%.
Tier 1 capital, which typically includes common stock and retained earnings, is used by regulators to measure the capital adequacy of a bank. The postponement was motivated by "the continuing stressed conditions in the financial markets and in order to promote stability in the financial markets and banking industry as a whole", according to a statement by the Fed.