Wells Fargo & Co. Financial Chief John Shrewsberry said the San Francisco bank would need to raise at least $40 billion in new debt, with the executive saying Friday his firm and others are “victims” of upcoming regulatory requirements.
Shrewsberry said at an investor conference the bank WFC, +2.24% would need to issue about $40 billion of net new long-term debt to reach the “total loss-absorbing capacity,” or TLAC, regulatory requirement. He said if the bank has an additional “prudent” TLAC buffer it would need to issue another $20 billion of debt, for a possible $60 billion in new debt related to TLAC.
This regulatory requirement is an attempt to force the biggest U.S. banks to hold enough resources on their books so that they wouldn’t need to seek an infusion of taxpayer funds, even if they face extreme trouble along the lines of the 2008 financial crisis.
That $60 billion in new debt for Wells Fargo does depend on factors including its risk-weighted asset growth, when and how quickly it issues debt, and how much of an internal buffer the bank holds, Shrewsberry said.
An expanded version of this report appears at WSJ.com.
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