Many a banker has fretted about the status their employer bestows upon them by mere brand value. Exactly which firms are first tier, second tier, or even the possibly outdated ‘Bulge Bracket’ matters.
Of course the latest crisis has practically made it a requisite to roll one’s eyes when name-dropping any bank at all in the presence of friends who work outside of the financial sector. The my-employer-is-more-awesome-than-yours game works in increasingly fewer circles. Read more
Banks are interconnected, and carry systemic risk to the economy. One doesn’t need the experience of a crisis to know this, it’s just intuitive.
On a similarly intuitive basis, are insurers systemically important? Read more
The world’s biggest banks are set to have a new voice on the global regulatory stage as a little known body that acts as an umbrella group for three regional trade associations beefs up its profile and changes its top management, says the FT. The Global Financial Markets Association plans to reinvent itself as a body to represent the interests of the world’s biggest banks, as regulators around the world start to target the toughest new rules at a category of so-called GSifis – global systemically important financial institutions – most of which are banks, or GSibs in the jargon. Read more
On Friday, the Financial Stability Board published the provisional list of global systemically important financial institutions (G-Sifis).
This had been widely trailed but we’re still wrestling with a tricky question: Read more
Global banking regulators have brushed off criticism from bank chief executives, saying that they will press ahead with plans for capital surcharges on the largest and most interconnected global banks starting in 2016, reports the FT. The Basel Committee on Banking Supervision said that it plans to make some technical adjustments to the way global systemically important financial institutions, known as G-Sifis, are classified, But people close to the process said that they are unlikely to change the rankings. Currently 28 institutions are expected to face additional capital requirements, with eight banks expected to be hit with the highest surcharge of top quality core tier one capital equal to 2.5 per cent of their assets, adjusted for risk. Read more
The Financial Stability Board on Monday night declared the capital surcharge requirements for global ‘SIFIs’, as drafted by the Basel Committee last month, shall go ahead. Ditto “living wills”.
The real fun will come later this week, when the methodology for determining who is a G-SIFI will be published, along with proposals for measures that can be taken to deal with failing SIFIs, such as the living will. Read more
…Around the world, and (potentially) sat on the face of the global recovery.
Governments and financial regulators will keep fluid a list of big banks that should be classed as global systemically important financial institutions – or GSifis – as they strive to deal with the potential danger of a two-tier system, reports the FT. Twenty or more of the world’s biggest banks are set to be categorised as GSifis but regulators are determined that the list should be reviewed regularly – at least annually, according to one senior supervisor – so institutions that grow or change rapidly or acquire rivals can be brought into the regime. At the same time a new global regulatory group will be created to police the way national regulators supervise their GSifis and impose tighter rules as well as possible capital surcharges and mandatory losses on creditors in the event of a government bail-out. The new rules are to be outlined in a G20 communique on Friday. Read more