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By Steve Slater
LONDON, Nov 21 (IFR) - Citigroup, Bank of America MerrillLynch, Wells Fargo and ICBC will all have to hold extra capitalfrom 2018 as a result of changes to the list of the world's mostimportant banks.
In contrast, HSBC, Barclays and Morgan Stanley will seetheir minimum capital requirements reduced under the latest listfor major banks released by the Financial Stability Board onMonday.
The FSB made no changes to the banks included in its list ofthe 30 biggest and most systemically important global banks inits annual review. But it made seven changes to the "buckets"that determine the surplus capital banks must hold.
Policymakers and regulators said after the 2008/09 financialcrisis that the world's biggest banks would have to hold morecapital than smaller rivals to better protect savers andtaxpayers. They said the top banks, dubbed G-SIBs, needed tohold an extra layer of capital on top of the minimum levels,based on their size and complexity.
Under the latest list, Citigroup and JP Morgan areconsidered the biggest and most complex banks and are in thebucket requiring them to hold an extra 2.5% of capital. In allprevious years HSBC and JP Morgan had been the only two banks inthat bucket.
The FSB said HSBC now only has a capital surplus requirementof 2%.
BAML also needs to hold an extra 2% of capital, up from 1.5%previously. Remaining in the 2% surcharge bucket are BNP Paribasand Deutsche Bank.
The FSB said Wells Fargo and Industrial & Commercial Bank ofChina now need to hold an extra 1.5% of capital, up from 1%previously.
Barclays now needs to hold 1.5% extra capital, down from 2%,and Morgan Stanley an extra 1%, from 1.5% previously.
The changes in capital requirements can be significant.Having to hold extra capital on a big global balance sheet canbe costly for banks.
As well as higher capital buffer requirements, G-SIBs arealso subject to stricter rules on total loss-absorbing capital,resolution and recovery, and supervision.
The list of G-SIBs can be seen here: http://www.fsb.org/wp-content/uploads/2016-list-of-global-systemically-important-banks-G-SIBs.pdf
(Reporting by Steve Slater)
