Regulators spell out fine print of big bank rescues

* Big banks get more detailed rules on recovery plans

* Regulators shy away from specific capital ratio trigger

* FSB says hitting trigger does not mean automatic action

By Huw Jones

LONDON, July 16 (Reuters) - The world's top banks must spellout what would trigger capital raising and other steps tosurvive a crisis without needing taxpayer money, a globalregulatory body said on Tuesday.

The Financial Stability Board (FSB) published final guidancefor lenders and supervisors listing "triggers" that would forcea bank to consider action to shore up its capital, such aswriting down its bonds.

The FSB coordinates rules agreed by the top 20 economies(G20) to put an end to the "too big to fail" syndrome, so bankscan be wound up without taxpayer money or the market meltdownseen when Lehman Brothers went bust nearly five years ago.

Compared with a draft version put out to consultation, theFSB has given banks a bit more leeway, saying that hitting atrigger should not automatically require rescue action.

The British Bankers' Association (BBA) had told the FSB thatthe word "trigger" implied the need for an automatic response.

Instead, banks will have to say in advance what happens oncea trigger is hit, such as how the issue will be escalated to atop executive or the bank's board.

"Today's publication marks a further important step towardsmaking the largest, most complex financial firms resolvablewithout taxpayer solvency support," said Paul Tucker, deputygovernor of the Bank of England and chair of the FSB workinggroup which wrote the guidance.

The G20 has already drawn up a list of 28 banks such asGoldman Sachs Group Inc, Deutsche Bank AG,HSBC Holdings Plc and Morgan Stanley, who willhave to comply with the latest guidance.

FINANCIAL STRENGTH

"The aim of triggers in recovery planning is to enable firmsto maintain or restore financial strength and viability beforeregulatory authorities see the need to intervene or enforcerecovery measures," the FSB's new guidance said.

"Firms should be required to provide supervisors andresolution authorities with an explanation of how the triggercalibrations were determined and an analysis that demonstratesthat the triggers would be breached early enough to beeffective."

Triggers can include a credit rating downgrade, a fall incapital ratios, a run on deposits or being asked to post morecollateral to back trades.

However, the FSB shied away from a specific capital ratiotrigger, as Swiss regulators have done with Credit Suisse GroupAG and UBS AG, two banks also on the G20list and subject to the new guidance.

Holders of Credit Suisse's bonds, for example, will bearlosses if the banks' core capital ratio falls below 7 percent, alevel some hawkish regulators feel is too low.

Barclays Plc, whose bonds are wiped out if its coreequity capital ratio falls below 7 percent, had told the FSBthat triggers should be determined by the bank itself, thoughsubject to review by supervisors.

The guidance also gives flexibility for banks who may needseveral resolution plans to cover different operations acrossthe world, though all plans show where bonds would be held forwriting down.

The guidance fleshes out broad principles published by theFSB in November 2011.