U.S. Banks 2026 Outlook: Part 1, Regulation
Peter Simon, CFA - Co-Head of U.S. Financials, CreditSights
Iris Shi, CFA - Analyst, Banks, CreditSights
George Milonopoulos, CFA - Analyst, Banks, CreditSights
18 December 2025
Insights into U.S. Banks 2026 Outlook: Part 1, Regulation, including:
- Basel Endgame re-proposal anticipated in 2026: Consequently, regulators expect moderate RWA increases of 3-7% versus initial 20% proposal from 2023.
- Enhanced Supplementary Leverage Ratio reforms finalized: The eSLR changes release approximately $29.6 billion Tier 1 capital across GSIBs effective April 2026.
- Stress testing transparency proposals advance regulatory accountability: Fed introduces enhanced model disclosure requirements and two-year averaging to reduce Stress Capital Buffer volatility.
- Bank supervision priorities narrow toward material financial risks: Moreover, new operating principles streamline examinations by focusing on safety and soundness over procedural compliance.
- Visa and Mastercard merchant settlement impacts premium card strategies: Proposed interchange fee reductions and honor-all-cards removal create uncertainty for rewards credit card programs.
Executive Summary
Part 1 of our 2026 Outlook examines the regulatory landscape for U.S. Banks. Regulatory changes represent normalization and simplification without significantly increasing sector risk.
Basel Endgame re-proposal remains the most impactful proposal expected in 2026. Consequently, regulators anticipate moderate RWA increases rather than the severe 2023 proposal levels.
Enhanced Supplementary Leverage Ratio changes were finalized in November with limited capital release. The modifications reduce large bank debt requirements and may pressure HoldCo issuance downward.
Federal Reserve proposals significantly increase stress test modeling and scenario design transparency. Proposed model changes for 2026 are not expected to materially impact aggregated results.
Supervisory priorities now focus on material financial risks rather than procedural compliance issues. Moreover, Visa and Mastercard’s merchant settlement could affect premium credit card acceptance and costs.
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