The Basel Committee on Banking Supervision (BCBS) published further information related to its 2021 assessment of global systemically important banks (G-SIBs), with additional details to help understand the scoring methodology. Meanwhile, the Financial Stability Board (FSB) published the 2021 list of G-SIBs using end-2020 data and an assessment methodology designed by BCBS. This year's list features the same 30 banks that were on the 2020 list; however, three banks have moved to a higher bucket: JP Morgan Chase has moved from bucket 3 to bucket 4, BNP Paribas has moved from bucket 2 to bucket 3, and Goldman Sachs has moved from bucket 1 to bucket 2.
The assignment of G-SIBs to the buckets in this list determines the higher capital buffer requirements that will apply to each G-SIB from January 01, 2023. 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.
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 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 firms’ Crisis Management Groups.
Higher supervisory expectations: These include supervisory expectations for risk management functions, risk data aggregation capabilities, risk governance, and internal controls.
BCBS published the updated denominators used to calculate banks’ scores, the thresholds used to allocate the banks to buckets, and the values of the twelve high-level indicators of all banks in the main sample used in the G-SIB scoring exercise. BCBS also provides the links to the public disclosures of all banks in the full sample of banks assessed. Earlier this month, BCBS approved a technical amendment to the G-SIB assessment methodology review process, which replaces the previous three-year review cycle with a process of ongoing monitoring and review. In the near term, BCBS will review the implications of developments related to the European Banking Union for the G-SIB methodology. In particular, this will include a targeted review of the treatment of cross-border exposures within the Banking Union on the G-SIB methodology. A new list of G-SIBs will next be published in November 2022.
Keywords: International, Banking, G-SIBs, Systemic Risk, Regulatory Capital, Basel, TLAC, G-SIB Assessment, Cross-Border Exposures, BCBS, FSB
Previous ArticleFASB Proposes Improvements to Credit Losses Standard
The European Banking Authority (EBA) has published the final templates, and the associated guidance, for collecting climate-related data for the one-off Fit-for-55 climate risk scenario analysis.
The European Banking Authority (EBA) recently published a report that recommends enhancements to the Pillar 1 framework, under the prudential rules, to capture environmental and social risks.
As a follow on from its prudential standard on the treatment of crypto-asset exposures, the Basel Committee on Banking Supervision (BCBS) proposed disclosure requirements for crypto-asset exposures of banks.
The Basel Committee on Banking Supervision (BCBS) and the European Banking Authority (EBA) have published results of the Basel III monitoring exercise.
The Prudential Regulation Authority (PRA) recently issued a few regulatory updates for banks, with the updated Basel implementation timelines being the key among them.
The U.S. Department of the Treasury has recently set out the principles for net-zero financing and investment.
The European Commission (EC) launched a stakeholder survey on the draft International Guiding Principles for organizations developing advanced artificial intelligence (AI) systems.
The finalization of the two sustainability disclosure standards—IFRS S1 and IFRS S2—is expected to be a significant step forward in the harmonization of sustainability disclosures worldwide.
Decentralized finance (DeFi) is expected to increase in prominence, finding traction in use cases such as lending, trading, and investing, without the intermediation of traditional financial institutions.
The Basel Committee on Banking Supervision (BCBS) published reports that assessed the overall implementation of the net stable funding ratio (NSFR) and the large exposures rules in the U.S.