The biggest US banks would face a 9% increase in capital requirements — a dramatic retreat from the original plan — after regulators agreed to sweeping changes to a proposed package of rules, according to people familiar with the matter.

Australia's prudential regulator proposed to replace bank hybrid bonds with more reliable and less expensive forms of capital on Tuesday, as rising ownership of hybrid securities among retail investors poses a financial stability risk.

The largest U.S. banks, known as global systemically important banks (GSIBs), would encounter a 9% increase in capital requirements in a revised bank-capital overhaul unveiled Tuesday by Federal Reserve Vice Chair for Supervision Michael Barr.