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.
Keywords: International, Banking, Basel, Regulatory Capital, Systemic Risk, G-SIBs, FSB
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