JPMorgan slams rules that would spur $20 billion capital hike

(Bloomberg) -- JPMorgan Chase & Co. warned that new regulatory proposals will force the bank to hold onto $20 billion more of capital, a move that Chief Executive Officer Jamie Dimon criticized for locking up those funds "for no good reason."

Chief Financial Officer Jeremy Barnum cited a "persistent miscalibration" of the surcharge on the biggest banks, and detailed the financial impact to his firm. JPMorgan also reiterated its recommendation for changing the so-called G-SIB surcharge.

"We recognize that we are larger and more systemically important than even large domestic peers. But in the end, the question is how much more should the cost be?" Barnum said Tuesday on a conference call discussing first-quarter results.

Regulators released a package of proposals earlier this year, which are still in a comment period. The Federal Reserve said the changes would broadly lower capital requirements for the biggest banks.

The plans were seen as a win for Wall Street, which mobilized to fight back against an earlier Biden-era proposal to significantly hike capital requirements. But in his annual shareholder letter earlier this month, Dimon wrote that JPMorgan's initial reaction to the latest proposals are "mixed," adding that the surcharge for global systemically important banks is "broken."

JPMorgan said its required capital would go up about 4% from proposed changes to the Basel III endgame rules, the surcharge for global systemically important banks and the Fed's annual stress tests. Other large banks would see a roughly 5% drop in their capital requirements, JPMorgan said.

"This persistent miscalibration of the US surcharge is obviously bad for international competitiveness, but more importantly, domestically, this means that the cost of credit from JPMorgan Chase to US households and businesses is likely higher than it is from other domestic non-GSIB banks," Barnum said.

--With assistance from Max Abelson.

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