The G20 leaders endorsed FSB’s policy measures to address the risks to the global financial system of systemically important financial institutions (SIFIs). They also approved the timescales for implementation and named the initial group of 29 global SIFIs. The package of measures is made up of:
- an international standard to be a point of reference for national resolution regimes: this will set out the responsibilities, instruments and powers that all national resolution regimes should have;
- requirements for resolvability assessments, recovery and resolution plans (RRPs) and cross-border cooperation agreements specific to individual G-SIFIs: these should prepare home and host authorities better for dealing with crises and cooperating during them;
- requirements that all global systemically important banks (G-SIBs) hold loss-absorption capacity above Basel III standards: this will rise from 1 to 2.5% of risk-weighted assets; and
- more intensive and effective supervision: this will involve not only stronger supervisory mandates but also higher expectations on risk management and governance and internal controls.
FSB intends to use the Basel methodology to review and update a list of G-SIFIs each November. FSB and Basel will work to extend the framework to all SIFIs, and the International Association of Insurance Supervisors should complete its methodology for identifying global systemically important insurers by the June 2012 G20 Summit. The 29 groups named now must meet the requirements on resolution by the end of 2012. Banks that are identified as G-SIFIs in 2014 will have to meet the new loss absorbency requirements and supervisory expectations by 2016. FSB also intends to put in place a peer assessment programme to ensure proper implementation. The initial list of G-SIFIs includes entities headquartered in several jurisdictions, including the US, the UK, the rest of Europe and Asia Pacific. (Source: FSB Statement on SIFI Policy Measures and FSB Announces SIFI Measures and First Group of SIFIs)
