Mayra Rodriguez Valladares, managing principal for MRV Associates, said the leverage ratio, which is expected to be put to a vote by the Fed on April 8, will keep bank capital returns in check. With a significant amount of derivatives held off-balance-sheet, banks will have to retain as much high-quality capital as they can, Rodriguez Valladares said.
“All of a sudden, all of these things they had off-balance-sheet are going to be covered, and that is a ratio that most banks are going to struggle to keep up with,” Rodriguez Valladares told SNL. “Even if it weren’t for CCAR, I think the leverage ratio is going to make it difficult for them to be paying out a lot in dividends.”