Bank Stocks Sell Off as Basel Could Set 3.5 Percentage Point Capital Surcharge (XLF)

Banking stocks have pared gains over the last half hour of trade following chatter the Basel Committee on Banking Supervision could impose capital surcharges of up to 3.5 percentage points on the US's largest banks. This would be above the 2-2.5 percent recent reports have suggested. The fees would be aiming directly at curbing growth within the sector.

Sources say banks would face fees based on a "sliding scale" based on size and links to other lenders. Most banks would not initially be forced to pay the top-tier surcharge.

More details of the proposed plan will likely be offered next week as Committee meetings in Switzerland are set to continue.

The Financial Select Sector SPDR ETF (NYSE: XLF) has fallen nearly a percent since about 1:30pm ET when headlines first began hitting the wires.

Elsewhere in Banking group:

• Bank of America (NYSE: BAC) down 0.7 percent
  
  
• Citi (NYSE: C) down 2.2 percent
  
  
• Goldman Sachs (NYSE: GS) up 0.2 percent (after trading up as much as 1.5 percent earlier)
  
  
• JPMorgan (NYSE: JPM) down 2.1 percent
  
  
• Morgan Stanley (NYSE: MS) down 0.1 percent
  
  
• Wells Fargo (NYSE: WFC) down 0.5 percent

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