On 3 November 2015 the Financial Stability Board (FSB) published the latest update of the list of global systemically important banks (G-SIBs).
The FSB has now issued the final Total Loss-Absorbing Capacity (TLAC) standard for G-SIBs.
The TLAC standard defines a minimum requirement for the instruments and liabilities that should be readily available for bail-in within resolution at G-SIBs, but does not limit authorities’ powers under applicable resolution law to expose other liabilities to loss through bail-in or the application of other resolution tools.
G-SIBs will be required to meet the TLAC requirement alongside the minimum regulatory requirements set out in the Basel III framework. Specifically, they will be required to meet a Minimum TLAC requirement of at least 16% of the resolution group’s risk-weighted assets (TLAC RWA Minimum) as from 1 January 2019 and at least 18% as from 1 January 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator (TLAC Leverage Ratio Exposure (LRE) Minimum) as from 1 January 2019, and at least 6.75% as from 1 January 2022.
G-SIBs headquartered in emerging market economies will be required to meet the 16% RWE and 6% LRE Minimum TLAC requirement no later than 1 January 2025, and the 18% RWA and 6.75% LRE Minimum TLAC, requirement no later than 1 January 2028. This conformance period will be accelerated if, in the next five years corporate debt markets in these economies reach 55% of the emerging market economy’s GDP.
The FSB will monitor implementation of the TLAC standard and will undertake a review of the technical implementation by the end of 2019.
The FSB has also published a Resolution progress report which provides an update on the findings from the first Resolvability Assessment Process for G-SIBs and the further work undertaken to address the identified remaining obstacles to the resolvability of G-SIBs.