Analysis: The battle to define G-Sifis
Thursday 10 November 2011 - by Karina Whalley
The European Banking Federation is warning that many of the banks that triggered the financial crisis in 2007 and 2008 would not have been included in the current list of systemically important financial institutions.
Firms including Barclays, HSBC, Goldman Sachs and Bank of America will now be subject to extra capital surcharges, greater supervisory and regulatory requirements and will have to demonstrate they have effective resolution and recovery plans in place.
The Basel Committee has indicated that banks chosen as G-sifis will change over time with the list being updated annually. Banks on the current list will have to have resolution plans put in place by next year but the capital surcharges will only apply to the 2014 revised list of institutions. The final implementation of the extra capital requirements will take place in 2016.
"I would be cautious of looking at the impact in terms of a mechanical effect of surcharges because the surcharges will kick in for a different list," says Véron.
He is also "pleased" that a few Asian banks were included as being systemically important. Japanese banks, Mitsubishi UFJ FG, Mizuho FG, Sumitomo Mitsui FG as well as the Bank of China are on the list.
"As the start of the process it's good to signal that Japan and China are not exempt," adds Véron.
Lawrence Goodman, president of the Centre for Financial Stability, says that more work needs to be done in the area of systemically important institutions.
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