A street sign for Wall Street is seen outside the New York Stock Exchange (NYSE) in Manhattan, New York City, U.S. December 28, 2016. REUTERS/Andrew Kelly

WASHINGTON (Reuters) - U.S. bank regulators proposed on Tuesday holding off on implementing stricter capital rules for smaller banks while the agencies review ways to simplify requirements for less complex institutions.

Banks with less than $250 billion in assets and less than $10 billion in foreign exposure would be permitted to continue complying with simpler temporary capital rules beyond the beginning of 2018. Large banks would still face stricter capital requirements, beginning on Jan. 1, 2018.

Regulators had previously announced plans to simplify capital rules for smaller banks, and now are taking steps to ensure the fully phased-in capital requirements do not take effect for institutions where regulators want to lighten the regulatory load.

The Federal Reserve, Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency signed off on the action.

FDIC Vice Chairman Thomas Hoenig urged regulators to go even further in easing rules for less complicated banks.

“Community banks engaging in traditional activities deserve meaningful relief from risk-based capital rules,” he said in a statement.

Specifically, smaller banks will now be able to continue to rely on temporary rules regarding capital for several financial products, including mortgage servicing assets, certain deferred tax assets, and investments in the capital instruments of unconsolidated financial institutions.

In March, the regulators announced that they would launch an effort to ease regulations for smaller institutions, as part of a mandatory requirement to review all existing rules every 10 years. Simplifying capital rules for community banks was identified as a priority following that review, but regulators have not said when they will release those new rules.