02 November 2012

28 Global Systemically Important Financial Institutions (GSifi) List

Financial Times, Brooke Masters, 2 November 2012

Standard Chartered and BBVA have joined the global banks that will be required to hold extra capital because of their importance to the world financial system, the Financial Stability Board announced on Thursday.

Lloyds Banking Group, Commerzbank and Dexia, have dropped off the list of 28 'global systemically important financial institutions.' Dexia is being restructured and Lloyds and Commerzbank are shrinking.

Banks on the list will be required to hold additional capital equal to between 1 per cent and 2.5 per cent of their assets, adjusted for risk, on top of the Basel III minimums, for a total ratio of 8 per cent to 9.5 per cent, starting in 2016.

The Financial Stability Board, made up of regulators, central bankers and representatives of international bodies, plans to update its list of GSifis every November, and the methodology for determining which banks are systemic will also be reviewed every three years.

Currently, banks make the list based on their size, riskiness and importance to the broader financial system.

This year’s announcement also marks the first time regulators have officially stated how big the surcharges will be for each bank.

Previously the expected surcharges were based on estimates.

Citigroup, Deutsche Bank, HSBC and JPMorgan Chase were hit with the top charge of 2.5 per cent.

Most of the banks were on last year’s list and have either boosted their capital ratios or made plans to do so in time to meet the FSB deadline. Both Lloyds and Standard Chartered already have to meet UK requirements, which are stiffer than the global rules.

The GSifi banks and their regulators have also been required to draft “recovery and resolution plans”, also known as “living wills”, that lay out how they could be stabilised or shut down in a crisis.

The FSB said on Thursday that “considerable but uneven progress” had been made.

Cross-border “crisis management groups” of national regulators have been set up for most banks and they have begun reviewing the “recovery” part of the plans, which focus on which business lines could be sold to avoid insolvency.

The FSB said regulators hope to come up with windup strategies for each GSifi bank by the end of the year, with operational plans to follow later.

The full list of banks and surcharges is below:

Deutsche Bank
JPMorgan Chase

BNP Paribas

Bank of America
Bank of New York Mellon
Credit Suisse
Goldman Sachs
Mitsubishi UFJ FG
Morgan Stanley
Royal Bank of Scotland

Bank of China
Groupe BPCE
Group Crédit Agricole
ING Bank
Mizuho FG
Société Générale
Standard Chartered
State Street
Sumitomo Mitsui FG
UniCredit Group
Wells Fargo