⚠ The Buffer Is Already at the FloorModerate threat

Wells Fargo (WFC) — threat to the moat

Wells Fargo's stress buffer is at the regulatory floor, so capital rules can only get tighter from here.

Wells Fargo's stress capital buffer is 2.5%, the minimum the rules allow1. The bank's recent capital gains came from that buffer falling, and it cannot fall again.

Supplementary leverage ratio (%)6.2%Dec 20255.8%Jun 2026Wells Fargo Form 10-Q Q2 2026
Leverage rose with the balance sheet.

The other components can move up. A worse stress test, a larger surcharge or a new countercyclical buffer, now 0.00%2, would each raise the requirement from 8.5%.

The supplementary leverage ratio also fell, from 6.2% at the end of 2025 to 5.8% in June 20263, as the balance sheet grew.

The surcharge for systemic banks is 1.50% and the countercyclical buffer 0.00%4; both are set by regulators, and neither can be lowered by the bank's own efforts.

A year earlier the total requirement was 9.80%5; the fall to 8.50% came from the stress buffer reaching its floor, which is not something that can happen twice.

The floor, not the bank's own risk, is what binds. Its stress test results "continued to be below the stress capital buffer (SCB) floor"6, which means the Federal Reserve's modelled losses would justify less than 2.5%, and the requirement can therefore only move up from here.

That is also why riskier growth costs more than it seems. Every extra dollar of trading assets or corporate loans raises risk-weighted assets, and with the buffer at 2.50%7 there is no further relief to absorb them.

The requirement is set each year after the stress test. An increase of even half a point, with the ratio at 10.3%, would cut the headroom by more than a quarter.

References
  1. ReportedWells Fargo's stress capital buffer is 2.5%, the minimum the rules allow.
    Wells Fargo second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - capital, capital return and credit quality. — Q2 2026 · publ. 14 July 2026 · source ↗
  2. ReportedA worse stress test, a larger surcharge or a new countercyclical buffer, now 0.00%, would each raise the requirement from 8.5%.
    Wells Fargo Form 10-Q for the quarter ended 30 June 2026 - balance sheet, capital requirements, interest rate sensitivity, segment assets, headcount and legal actions. — Q2 2026 · publ. 28 July 2026 · source ↗
  3. ReportedThe supplementary leverage ratio also fell, from 6.2% at the end of 2025 to 5.8% in June 2026, as the balance sheet grew.
    Wells Fargo Form 10-Q for the quarter ended 30 June 2026 - balance sheet, capital requirements, interest rate sensitivity, segment assets, headcount and legal actions. — Q2 2026 · publ. 28 July 2026 · source ↗
  4. ReportedThe surcharge for systemic banks is 1.50% and the countercyclical buffer 0.00%; both are set by regulators, and neither can be lowered by the bank's own efforts.
    Wells Fargo Form 10-Q for the quarter ended 30 June 2026 - balance sheet, capital requirements, interest rate sensitivity, segment assets, headcount and legal actions. — Q2 2026 · publ. 28 July 2026 · source ↗
  5. ReportedA year earlier the total requirement was 9.80%; the fall to 8.50% came from the stress buffer reaching its floor, which is not something that can happen twice.
    Wells Fargo 2024 Annual Report (financial statements and MD&A), part of the Form 10-K for fiscal 2024 - customer remediation accruals, the CFPB order termination, the 9.80% CET1 requirement and the debit interchange and overdraft rules. — FY2024 · publ. February 2025 · source ↗
  6. ReportedIts stress test results "continued to be below the stress capital buffer (SCB) floor", which means the Federal Reserve's modelled losses would justify less than 2.5%, and the requirement can therefore only move up from here.
    Wells Fargo second-quarter 2026 earnings release, Form 8-K exhibit 99.1 - capital, capital return and credit quality. — Q2 2026 · publ. 14 July 2026 · source ↗
  7. ReportedEvery extra dollar of trading assets or corporate loans raises risk-weighted assets, and with the buffer at 2.50% there is no further relief to absorb them.
    Wells Fargo Form 10-Q for the quarter ended 30 June 2026 - balance sheet, capital requirements, interest rate sensitivity, segment assets, headcount and legal actions. — Q2 2026 · publ. 28 July 2026 · source ↗
Sources
Generated September 28, 2026