JPMorgan Chase's New Regulatory Capital Requirement Is Bad News for the Company
America's largest bank, JPMorgan Chase (NYSE: JPM), continues to get the short end of the regulatory stick when it comes to capital requirements. Following the Federal Reserve's stress testing last week, JPMorgan recently said its new required common equity tier 1 (CET1) capital ratio threshold had increased from 10.5% to 11.3% .
That means the bank will have to hold billions of dollars more in regulatory capital to cover unexpected loan losses. While the move might be prudent considering the times ahead, it doesn't bode as well for JPMorgan's stock because regulatory capital cannot generate any kind of return for the bank. Additionally, this new requirement could make maintaining the dividend more of a challenge for JPMorgan down the line.
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Source Fool.com
