FSB published the 2018 list of global systemically important banks (G-SIBs) using end-2017 data and an assessment methodology designed by BCBS. One bank (Groupe BPCE) has been added to the list while two banks (Nordea and Royal Bank of Scotland) have been removed from the list. Consequently, the overall number of G-SIBs have decreased from 30 to 29. A new list of G-SIBs will next be published in November 2019.
FSB member authorities apply the following requirements to G-SIBs:
Higher capital buffer: The G-SIBs are allocated to buckets corresponding to of higher capital buffers that national authorities require banks to hold in accordance with international standards. Compared with the 2017 list of G-SIBs, two banks have moved to a lower bucket: Bank of America has moved from bucket 3 to bucket 2 and China Construction Bank has moved from bucket 2 to bucket 1.
Total Loss-Absorbing Capacity (TLAC): G-SIBs are required by national authorities to meet the TLAC standard, alongside the regulatory capital requirements set out in the Basel III framework. The TLAC standard will be phased in from January 01, 2019 for G-SIBs identified in the 2015 list (provided that they continue to be designated as G-SIBs thereafter).
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 (RAP) by senior regulators within the firms’ Crisis Management Groups.
Higher supervisory expectations: These include heightened supervisory expectations for risk management functions, risk data aggregation capabilities, risk governance, and internal controls.
In addition to the G-SIB list published by FSB, BCBS published the updated denominators used to calculate scores of banks, along with the values of the underlying twelve indicators for each bank in the assessment sample. BCBS also published the thresholds used to allocate the G-SIBs to buckets, along with the updated links to public disclosures of all banks in the sample. In July 2018, BCBS also published a revised version of its assessment methodology, replacing the July 2013 version. The revised assessment methodology will take effect in 2021 (based on end-2020 data). This current G-SIB assessment, however, is based on the methodology published by BCBS in July 2013.
Keywords: International, Banking, G-SIB, G-SIB Assessment, Systemic Risk, 2018 G-SIB List, BCBS, FSB
Sam leads the quantitative research team within the CreditEdge™ research group. In this role, he develops novel risk and forecasting solutions for financial institutions while providing thought leadership on related trends in global financial markets.
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