Central bankers agree on bank capital surcharge plan

 

By Huw Jones, Reuters June 25, 2011

BASEL, Switzerland/LONDON June 25 (Reuters) - Global banking regulators have agreed on a proposal to slap an extra capital charge on the world's biggest banks to make them safer by 2019.

The surcharge is part of a series of regulatory reforms launched in response to the financial crisis, which forced countries worldwide into costly bailouts of their banking sectors to prevent systemic collapses.

The Group of Governors and Heads of Supervision (GHOS) said after a meeting in Basel on Saturday the proposal would be put out to public consultation next month.

"The additional loss absorbency requirements are to be met with progressive common equity tier 1 capital requirement ranging from 1 per cent to 2.5 per cent, depending on a bank's systemic importance," the group said in a statement.

An additional 1 per cent surcharge would also be imposed if a bank becomes significantly bigger, pushing the total to 3.5 per cent.

The plans, which need approval from world leaders (G20) in November, would be phased in between Jan. 1 2016 and end of 2018.

The capital surcharge will come on top of the new 7 per cent minimum core capital all banks across the world will have to hold under new Basel III rules being phased in over six years from 2013.

However, many of the world's biggest banks already hold core tier 1 capital ratios of 10 per cent or more and therefore easily meet or exceed the top end of the surcharge band.

The central bankers have opted for a smaller surcharge than forseen but, in return, the surcharge will have to be in the form of top quality capital — retained earnings or common equity.

This marks a victory for hardline countries such as Britain and the United States but will disappoint some banks that have been hoping to use hybrid debt such as contingent capital to pad out the surcharge band.

COCOS REVIEWED

The proposal, which was due to be finalized by last November but faced opposition from banks and some countries, will apply initially to so-called globally systemically important banks (G-SIBs).

"These measures will strengthen the resilience of G-SIBs and create strong incentives for them to reduce their systemic importance over time," the statement said.

The consultation paper in July will indicate how many banks face a capital surcharge but it is not clear yet if their names will be published.

The number of banks affected is likely to change over time as lenders grow or shrink and the consultation will spell out how often a snapshot of the sector will be taken.

Banks will face a surcharge according to an indicator that draws on five elements — size, interconnectedness, lack of substitutability, global (cross-jurisdictional) activity, and complexity.

The group of central bankers and the Basel Committee it oversees said they will continue to review the use of contingent capital (CoCos).

The central bankers said they would support the use of contingent capital to meet higher national requirements than the global minimum surcharge.

However, even then, there would have to be a high-trigger for converting the debt into equity to help absorb losses on a going concern basis, the central bankers said.

Views: 54

Comment

You need to be a member of 12160 Social Network to add comments!

Join 12160 Social Network

"Destroying the New World Order"

TOP CONTENT THIS WEEK

THANK YOU FOR SUPPORTING THE SITE!

mobile page

12160.info/m

12160 Administrators

 

Latest Activity

Doc Vega's 4 blog posts were featured
7 hours ago
Burbia's blog post was featured

Charlie Kirk Assassination

September 10th 2025 in Utah Turning Point USA CEO has been assassinated. Coincidentally,  answering…See More
7 hours ago
Charles Magus's blog post was featured

FURTHER PROOF OF WALK-INS! Prisoners of the Dulce Base by Sherry Shriner

There is a real connection between the Cabal and what is happening at this Undergroung…See More
7 hours ago
Less Prone favorited Doc Vega's blog post Ashrams and Moonies Perfect Case for Mind Control
8 hours ago
Less Prone commented on tjdavis's blog post Sentient World Simulation
"Cannot open the link"
8 hours ago
Tina Sullivan is now a member of 12160 Social Network
13 hours ago
Doc Vega posted blog posts
23 hours ago
Sandy posted a video

We’re cooked

We’re cooked
yesterday
Sandy posted a photo
yesterday
tjdavis posted a video

Tom Horn discusses Masonic view of 2025

Startling perspective by Tom Horn of the upcoming year: 2025
yesterday
cheeki kea posted a photo
Tuesday
cheeki kea commented on Doc Vega's blog post Grooming the New Generation of Assassins
"It's a distressing state of affairs when evil leftists hardwire impressionable students and…"
Tuesday
Doc Vega commented on Doc Vega's blog post This Memorable Anthem Given by Nick Freitas Hit the Nail on the Head Please Listen!
"Burbia Charlie Kirk's wife is a real firebrand! God bless that poor woman! "
Monday
Doc Vega commented on Doc Vega's blog post This Memorable Anthem Given by Nick Freitas Hit the Nail on the Head Please Listen!
"Burbia thanks for the videos! "
Monday
Doc Vega posted blog posts
Monday
Burbia commented on tjdavis's video
Thumbnail

Charlie Kirk: Grief And Outrage From Turning Point USA in Phoenix

"Early reports said a.second shooter was there. Talk of Dischord chats. Peyton Gendron was coerced…"
Monday
tjdavis posted a video

America In Crisis: Illegals and Drug Smugglers Have Us Beat

An inside look at how bad the situation is at the Arizona/Mexico border. This exclusive tour with retired Arizona Sheriff Mark Lamb reveals just how bad thin...
Monday
Burbia posted a video

Sam Hyde Show: This is You

support the show: https://www.mde.tv/▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬🔥 BUY EXTREME PEACE on MDE.TV 🔥https://www.mde.tv/series/extreme-peace▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬▬...
Monday
Burbia commented on Sandy's photo
Monday
Burbia commented on Sandy's photo
Monday

© 2025   Created by truth.   Powered by

Badges  |  Report an Issue  |  Terms of Service

content and site copyright 12160.info 2007-2019 - all rights reserved. unless otherwise noted