WASHINGTON–Financial regulators from around the world said lenders in the United States now present a bigger risk to the financial system than last year and should face stiffer capital requirements to ward off threats.
Citigroup Inc., Bank of America Corp. and Wells Fargo & Co. all face higher capital surcharges after they rose in the Financial Stability Board’s latest ranking of the most systemically important banks in the world, Bloomberg reported.
Meanwhile, New York-based Morgan Stanley and U.K. lenders HSBC Holdings Plc and Barclays Plc saw their buffer levels fall, the FSB said in a statement. The new capital buffers apply starting in 2018.
According to the FSB, HSBC’s capital surcharge falls to 2% of risk-weighted assets from 2.5%, while Citigroup’s buffers rise to 2.5% from 2%. The FSB statement said Barclays surcharge falls to 1.5% from 2%; Wells Fargo rises to 1.5% from 1%; and the Industrial and Commercial Bank of China surcharge rises to 1.5% from 1%.
The FSB, which is led by Bank of England Governor Mark Carney, coordinates oversight of the most globally systemic banks to ensure they have sufficient capital to withstand losses. The capital surcharges are then implemented by national authorities that are members of the FSB.
The FSB said the changes in the list were the result of better data, changes in activities and supervisors’ judgement. The 30 banks on the list are also subject to bank-failure rules, known as total loss-absorbing capacity, that the FSB adopted last year, Bloomberg reported.