Canadian banks not 'systemically important'

Canadian banks not ‘systemically important’

Financial Stability Board releases its initial list of 29 global systemically important financial institutions

By: James Langton
November 4, 2011 November 4, 2011
11:45

The big Canadian banks have avoided being identified as among the world’s systemically important banks, a status that is to carry additional regulatory scrutiny and requirements.

Following the G20 summit in Cannes on Friday, the Financial Stability Board released its initial list of 29 global systemically important financial institutions (G-SIFIs). The initial list is based on a methodology set out by global banking regulators using data from the end of 2009. The list will be updated annually and published in November every year, and the methodology will be reviewed every three years.

At the summit, G20 leaders endorsed the implementation of an integrated set of policy measures to address the risks to the global financial system of the G-SIFIs. The measures include: requirements for additional capital buffers; a new international standard for reforms of national resolution regimes; requirements for resolvability assessments, recovery and resolution plans; and requirements for more intensive supervision of these firms.

The resolution-related requirements will need to be met by the end of 2012, whereas additional loss absorbency requirements and higher supervisory requirements will apply from 2016 for banks identified as G-SIFIs in November 2014.

“Full and consistent implementation of these policies will lower the probability and impact of SIFI failure, and address moral hazard risks by enabling financial institutions at the core of the global system to be resolved without disrupting the real economy and imposing costs on taxpayers,” said Mario Draghi, outgoing chairman of the FSB.

The initial list includes: