FSB List of Global Systemically Important Banks Remains Unchanged
FSB published the 2020 list of global systemically important banks (G-SIBs) using end-2019 data and an assessment methodology designed by BCBS. The list for 2020 contains the same 30 banks that were on the list for 2019. The assignment of G-SIBs to buckets in this list, however, determines the higher capital buffer requirements that will apply to G-SIBs from January 01, 2022. A new list of G-SIBs will next be published in November 2021. FSB also noted that the revised assessment methodology of BCBS, which is expected to result in higher capital buffer requirement, will be now applied in January 2024, one year later than originally scheduled.
In the 2020 list of G-SIBs, three banks have moved to a lower bucket: JP Morgan Chase has moved from bucket 4 to bucket 3 while Goldman Sachs and Wells Fargo have moved from bucket 2 to bucket 1. Moreover, the China Construction Bank has moved from bucket 1 to bucket 2. The provided numbers for each of the five bucket levels represent the required level of additional common equity loss absorbency as a percentage of risk-weighted assets that each G-SIB will be required to hold in 2022. The specified requirement for bucket 1 is 1.0%, bucket 2 is 1.5%, bucket 3 is 2.0%, bucket 4 is 2.5%, and bucket 5 is 3.5%; however, this year, no banks fall in buckets 4 and 5. FSB member authorities apply the following requirements to G-SIBs:
- Higher capital buffer: The G-SIBs are allocated to buckets corresponding to higher capital buffers that they are required to hold by national authorities in accordance with international standards. This year, three banks have moved to a lower bucket while one bank has moved to a higher bucket.
- Total Loss-Absorbing Capacity (TLAC): G-SIBs are required to meet the TLAC standard, along with the regulatory capital requirements set out in the Basel III framework. The TLAC standard began being phased in from January 01, 2019 for G-SIBs identified in the 2015 list that continued to be designated as G-SIBs.
- Resolvability: These include group-wide resolution planning and regular resolvability assessments. The resolvability of each G-SIB is also reviewed in a high-level FSB Resolvability Assessment Process by senior regulators within the Crisis Management Groups of firms.
- Higher supervisory expectations: These include supervisory expectations for risk management functions, risk data aggregation capabilities, risk governance, and internal controls.
Related Links
Keywords: International, Banking, Basel, Regulatory Capital, Systemic Risk, G-SIBs, FSB
Featured Experts
María Cañamero
Skilled market researcher; growth strategist; successful go-to-market campaign developer
Nicolas Degruson
Works with financial institutions, regulatory experts, business analysts, product managers, and software engineers to drive regulatory solutions across the globe.
Patrycja Oleksza
Applies proficiency and knowledge to regulatory capital and reporting analysis and coordinates business and product strategies in the banking technology area
Previous Article
FINMA Identifies and Assesses Risks Facing Financial SectorRelated Articles
HKMA Finalizes Policy Modules on Group-Wide Approach and Remuneration
The Hong Kong Monetary Authority (HKMA) revised the Supervisory Policy Manual module CG-5 that sets out guidelines on a sound remuneration system for authorized institutions.
EBA Guide to Monitor Threshold for Intermediate Parent Undertakings
The European Banking Authority (EBA) published the final guidelines on the monitoring of the threshold and other procedural aspects on the establishment of intermediate parent undertakings in European Union (EU), as laid down in the Capital Requirements Directive (CRD).
PRA Finalizes Approach to Supervision of International Banks
In a recent Market Notice, the Bank of England (BoE) confirmed that green gilts will have equivalent eligibility to existing gilts in its market operations.
FCA Issues PS21/9 on Implementation of Investment Firms Regime
The Financial Conduct Authority (FCA) published the policy statement PS21/9 on implementation of the Investment Firms Prudential Regime.
EBA Proposes Regulatory Standards to Identify Shadow Banking Entities
The European Banking Authority (EBA) proposed regulatory technical standards that set out criteria for identifying shadow banking entities for the purpose of reporting large exposures.
IOSCO Proposes Recommendations on ESG Ratings and Data Providers
The Board of the International Organization of Securities Commissions (IOSCO) proposed a set of recommendations on the environmental, social, and governance (ESG) ratings and data providers.
ESMA Group Issues Recommendations on RFR Switch in Interdealer Market
The European Securities and Markets Authority (ESMA) published recommendations from the Working Group on Euro Risk-Free Rates (RFR) on the switch to risk-free rates in the interdealer market.
ECB Study Assesses Impact of Basel III Finalization Package
The European Central Bank (ECB) published a paper as well as an article in the July Macroprudential Bulletin, both of which offer insights on the assessment of the impact of Basel III finalization package on the euro area.
ISDA Finds FRTB Results in Higher Capital Charges for Carbon Trading
The International Swaps and Derivatives Association (ISDA) published a paper that explores the impact of the Fundamental Review of the Trading Book (FRTB) on the trading of carbon certificates.
PRA Updates Remuneration Policy Statement Templates and Tables
The Prudential Regulation Authority (PRA) published the remuneration policy self-assessment templates and tables on strengthening accountability.
