FSB announces which banks are SIFI
07 November 2011 Basel
Image: Shutterstock
The Financial Stability Board (FSB) has identified an initial group of 29 globally systemic important financial institutions (G-SIFIs). Among them are Deutsche Bank, State Street, BNY Mellon and Bank of China.
Banks on the list, mainly European and American with a few Asian banks, will be faced with tougher international standards starting in early 2012 to reduce contagion risks associated with failure, including higher capital requirements and greater scrutiny of risk management procedures.
Reuters reports that the recent G20 leaders summit endorsed a core capital requirement surcharge starting at one percent of risk-weighted assets and rising to 2.5 percent for the biggest banks which would be phased in over three years from 2016 - the FSB did not say which capital bracket each of the 29 banks would fall into and continues to fine tune its methods. In addition, the G-SIFI list will be updated every year in November.
Tim Ryan, CEO of the Global Financial Markets Association (GFMA), said, "GFMA shares the FSB’s goal of ensuring the safety and soundness of the global financial system, which is critical to investor and consumer confidence...GFMA is disappointed that the FSB is moving forward with the capital surcharge framework. We continue to believe that requirements beyond what is required by the Basel III Accord are excessive and could raise the cost of credit available to businesses and consumers, stifling economic growth."
Also on the horizon, the Financial Transaction Tax favoured by influential European politicians is being fought by the financial services industry. US President Obama and Republicans have opposed the tax, while some Democrat lawmakers back the idea.
Banks on the list, mainly European and American with a few Asian banks, will be faced with tougher international standards starting in early 2012 to reduce contagion risks associated with failure, including higher capital requirements and greater scrutiny of risk management procedures.
Reuters reports that the recent G20 leaders summit endorsed a core capital requirement surcharge starting at one percent of risk-weighted assets and rising to 2.5 percent for the biggest banks which would be phased in over three years from 2016 - the FSB did not say which capital bracket each of the 29 banks would fall into and continues to fine tune its methods. In addition, the G-SIFI list will be updated every year in November.
Tim Ryan, CEO of the Global Financial Markets Association (GFMA), said, "GFMA shares the FSB’s goal of ensuring the safety and soundness of the global financial system, which is critical to investor and consumer confidence...GFMA is disappointed that the FSB is moving forward with the capital surcharge framework. We continue to believe that requirements beyond what is required by the Basel III Accord are excessive and could raise the cost of credit available to businesses and consumers, stifling economic growth."
Also on the horizon, the Financial Transaction Tax favoured by influential European politicians is being fought by the financial services industry. US President Obama and Republicans have opposed the tax, while some Democrat lawmakers back the idea.
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