DFS new leverage targets

Though it probably seemed like it would be a long time before leverage came back to the financial system, the following comment from Discover caught my eye on its most recent conference call. The company is moving from benchmarking equity on a tangible common basis to a Tier 1 (less strict) standard. It is also targeting a lower level of capital and therefore more leverage. From the call:

Turning to capital. For some time now, we have benchmarked our key capital ratio as tangible common equity-to-tangible assets with a target of plus or minus 8%. Going forward, we will switch to focusing on our Tier 1 common capital ratio as it better represents how regulators and the industry look at capital levels, and we have established a 9.5% long-term target. We ended the most recent quarter at 14.3%

Apologies to anyone who read this with glaring typos earlier. ┬áThat’s what I get for posting from my iPhone.

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