The international body charged with heading off risks to the global financial system on Friday listed 29 banks, including Bank of America, that will face stricter regulation and capital requirements under new measures adopted by world leaders meeting in France.
The tighter regulation of such “too big to fail” banks is aimed at reducing their chances of going bust and limiting economic fallout if they do.
The list released by the Basel, Switzerland-based Financial Stability Board (FSB) also includes Citigroup, Goldman Sachs and other major banks from France, Britain, Germany, Switzerland, China, Japan and elsewhere.
Speaking at a news conference on the sidelines of the Group of 20 summit, Mario Draghi, the outgoing head of the FSB, welcomed the G-20 leaders’ decision to sign off on the measures the FSB designed to strengthen banking oversight.
Lenders should meet capital rules that “are tailored to the impact of their default,” the FSB said in a statement Friday. “The enduring global economic benefits” of the measures “far exceed” any temporary dip in growth, it said.
The FSB list of 29 banks, known as “SIFIs,” includes those judged to be the most globally important to the financial system by their size and complexity. The measures were agreed on by regulators to prevent any “systemically important financial institution” from failing and roiling the global economy. The list doesn’t specify the exact surcharges banks may face.
“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,” Draghi said.
The Basel Committee on Banking Supervision, which drafted the surcharge plans, in September rejected calls to scrap additional capital buffers, instead agreeing to changes to how it calculates them. The measures were published Friday after approval by G-20 leaders in Cannes, France.
The surcharges will be applied on top of an overhaul of bank-capital requirements that international regulators agreed on last year. Those changes, known as Basel III, will more than triple the core reserves that lenders must hold.
The additional buffers mean lenders may face core capital requirements of as much as 9.5 percent of assets, weighted on risk. At least four banks face the top surcharge of 2.5 percent, according to provisional data published Friday by the Basel Committee, which didn’t specify any individual lenders.
The extra requirements will be phased in from 2016 through 2018, the FSB said.
The group will update its list of surcharge banks each year in November, using fresh data. The banks that will initially face the extra requirements will be those contained in the version of the list published in November 2014.
The FSB brings together regulators, central bankers and financial-ministry officials from the G-20.
Goldman Sachs and J.P. Morgan Chase are among eight U.S. banks on the list. David Wells, a spokesman for Goldman Sachs in New York, and Howard Opinsky, a J.P. Morgan spokesman, declined to comment. Jeanmarie McFadden, a spokeswoman for Morgan Stanley, which is included, also declined to comment. Other U.S. banks listed are Bank of America, Bank of New York Mellon, Wells Fargo, Citigroup and State Street.