G-SIBS in 2013 a Report by FSB

The Financial Stability Board headquartered in Basel, Switzerland monitors and recommend amendments to the financial system. The members are G20 economies, European Union and former Financial Stability Forum. FSB released this year’s. G-SIBS (Global Systematically Important Bank list in November. This report is about the amount of capital these banks have to hold to face any economic crisis.

This report cautions banks on the additional amount of capital they have to add up to face any financial downturn. HSBC and JP Morgan Chase have to add an extra capital up to 2.5%. Barclays, Citigroup, BNP Paribas and Deutsche Bank are running short of capital by 2.0%. Bank of America, Credit Suisse, Goldman Sachs, Group Credit Agricole, Mitsubishi UFJ FG, Morgan Stanley, Royal Bank of Scotland and UBS has to add their capital by 1.5%.

The last influencers on the world economy are People’s Bank of China, Bank of NewYork Mellen, BBVA, Groupe BPCE, Industrial and Commercial Bank of China LTD, ING Bank, Mizuho FG, Nordea, Santander, Societe Generale, Standard Charter, State Street, Sumitomo Mitsui FG, Unicredit Group and Wells Fargo and they have increase their capital by 1%.

As all the institutions are working on the policy to make more returns in the lowest capital, the decision of the FSB will force the G-SIBS to create new policies and new schemes. FSB has given time frame for resolution planning for these G-SIBS. The plan includes 1) Establishment of Crisis Management Group within 6 months, 2) Development of recovery plans within 12 months, 3) Development of a resolution strategy and review within CMG (Crisis Management Group), 4) Agreement of institution specific cross-border cooperation agreement within 18 months, 5) Development of operational resource plan within 18 months, 6) Conduct of resolvability assessment by CMG and resolvability assessment process within 24 months.