“European banks and the Federal Reserve began a chess match over new rules for U.S. units of foreign banks, with overseas firms expected to try and limit the impact and Fed officials vowing to prevent banks from evasion.”

“The jockeying over the Fed’s new rules could further ruffle tensions between the U.S. and Europe over what European officials see as a unilateral abandonment of a globally agreed-to approach for financial regulation.”

“The Fed’s move comes days before finance ministers and central-bank governors from the Group of 20 leading industrialized and emerging markets are due to meet in Sydney, Australia.”

“The G-20 has found it increasingly hard to keep a common line on regulation as the effect of the 2008 financial crisis has faded.”

“The Fed on Tuesday formally approved new rules requiring the largest international banks operating in the U.S. to set up U.S.-based “intermediate holding companies,” which will be subject to the same capital and liquidity requirements as domestic banks.”

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Read full Wall Street Journal article by Geoffrey Smith, Ryan Tracy and Stephanie Armour here.