Four global banks must hold most capital, say regulators

published 2 November 2012

Global regulators have said that Citigroup, Deutsche Bank, HSBC and JP Morgan Chase must hold additional capital in order to be able to absorb possible losses.

The Financial Stability Board published an updated list detailing the capital surcharges required for global systemically important banks (G-SIBs), and all four have were targeted for the highest capital surcharge of 2.5%.

Additional loss absorbency requirements for G-SIBs will be phased in starting from 2016, initially for those banks identified as G-SIBs in November 2014.

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The capital surcharges for systemic banks, set in half-percentage-point increments ranging from 1% to 2.5%, come on top of agreements by the Basel Committee on Banking Supervision to more than triple the core reserves they must hold against possible losses.

The extra requirements are calculated against banks' interconnectedness, size, complexity, global reach, and the ability of other firms to take over their functions if they fail.

The Financial Stability Board has been established to coordinate at the international level the work of national financial authorities and international standard setting bodies and to develop and promote the implementation of effective regulatory, supervisory and other financial sector policies in the interest of financial stability.