FSB published the 2019 list of global systemically important banks (G-SIBs), using the end-2018 data and an assessment methodology designed by BCBS. One bank (Toronto Dominion) has been added to the list of G-SIBs that were identified in 2018. Therefore, the overall number of G-SIBs has increased from 29 to 30. A new list of G-SIBs will next be published in November 2020. In addition to the G-SIB list published by FSB, BCBS published the updated denominators used to calculate scores of banks and the values of the twelve underlying 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.
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 national authorities require banks to hold in accordance with international standards. Compared with the 2018 list of G-SIBs, one bank—that is, Deutsche Bank—has moved from bucket 3 to bucket 2.
- Total Loss-Absorbing Capacity (TLAC): G-SIBs are required to meet the TLAC standard, alongside 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 (provided that they continued to be designated as G-SIBs thereafter).
- Resolvability: The resolvability requirements for G-SIBs 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 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.
The assessment methodology of BCBS assesses the systemic importance of global banks using indicators that are calculated based on the data for the previous fiscal year-end and this data is supplied by banks and validated by national authorities. The final scores are mapped to corresponding buckets, which determine the higher loss absorbency requirement for each G-SIB. In July 2018, BCBS concluded its first review of the G-SIB framework and published a revised assessment methodology, which is expected to be implemented in member jurisdictions by 2021. BCBS will complete the next review of the G-SIB framework by 2021.
Keywords: International, Banking, G-SIB, G-SIB Assessment, Systemic Risk, 2019 G-SIB List, TLAC, Basel III, Capital Buffer, BCBS, FSB
Across 35 years in banking, Blake has gained deep insights into the inner working of this sector. Over the last two decades, Blake has been an Operating Committee member, leading teams and executing strategies in Credit and Enterprise Risk as well as Line of Business. His focus over this time has been primarily Commercial/Corporate with particular emphasis on CRE. Blake has spent most of his career with large and mid-size banks. Blake joined Moody’s Analytics in 2021 after leading the transformation of the credit approval and reporting process at a $25 billion bank.
Previous ArticleExpert Group of EC Issues Recommendations on Framework for Fintech
The European Commission (EC) published a report summarizing responses to the targeted consultation on the supervisory convergence and the single rulebook in the European Union (EU).
The Office of the Superintendent of Financial Institutions (OSFI) published an update on the discussion paper that intended to engage federally regulated financial institutions and other interested stakeholders in a dialog with OSFI, to proactively enhance and align assurance expectations over key regulatory returns.
The European Central Bank (ECB) published its opinion on a proposal for a regulation on European green bonds, following a request from the European Parliament.
The Advisory Scientific Committee (ASC) of the European Systemic Risk Board (ESRB) published a report that explores the expected impact of digitalization on provision of financial and banking services, and proposes policy measures to address the risks stemming from digitalization.
The European Banking Authority (EBA) announced that the guidelines on the reporting and disclosure of exposures subject to measures COVID-relief measures shall continue to apply until further notice.
The Swedish Financial Supervisory Authority (FI) announced that the capital adequacy reporting as at December 31, 2021 must be done by February 11, 2022.
The Central Bank of the Philippines (BSP) issued communications covering developments related to online lending platforms, open finance framework and roadmap, and on the expected regulations in the area sustainable finance.
The Board of Governors of the Federal Reserve System (FED) published the final rule that amends Regulation I to reduce the quarterly reporting burden for member banks by automating the application process for adjusting their subscriptions to the Federal Reserve Bank capital stock, except in the context of mergers.
The European Banking Authority (EBA) published its assessment of risks through the quarterly Risk Dashboard and the results of the Autumn edition of the Risk Assessment Questionnaire (RAQ).
The Malta Financial Services Authority (MFSA) updated the guidelines on supervisory reporting requirements under the reporting framework 3.0.