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G-Sib assessments questioned as BPCE put back in after just one year out

Is the Financial Stability Board's approach to judging systemically important banks working as it should?

The Financial Stability Board’s latest stab at classifying banks of globally systemic importance, published on November 16, has got some analysts a bit hot under the collar.

The number of G-Sibs fell from 30 to 29 this year, making the total the same as it was when the initial list was first drawn up in 2011.

Bank of America and China Construction Bank (CCB) moved into lower categories of systemic importance, Groupe BPCE was added back into the list, while Nordea and RBS were removed altogether.

GSIB chart 250pxGSIB chart 1200px

The G-Sib bucket list:
click image to expand

As a note published on November 19 by Scope Ratings points out (‘Is the FSB’s scorecard approach for G-Sib classification fit for purpose?’), changes to the list “are not incidental matters”, given the capital implications of moving between Buckets 1 through 5 – which carry, respectively, 1%, 1.5%, 2%, 2.5% and 3.5% of additional common equity loss absorbency as a percentage of risk-weighted assets.

Banks get some time to implement any new burdens – they have 14 months, meaning that BPCE, for example, will need to be compliant by the beginning of 2020.

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