World's top banks face capital surcharge hit: report
The world's top banks will likely be hardest hit by new capital surcharges that would rise according to size, links to other lenders and how easily a bank could be replaced in a crisis, the Financial Times reported.
The FT report on Friday cited global regulators and said the proposals would be good news for large, but domestically focused Chinese and Japanese banks, and for second-tier European and U.S. banks.
Financial regulators and central bankers from the world's top economies, meeting as the Financial Stability Board, will decide this year which banks should be considered as systemically important financial institutions (SIFIs), and how much additional top-quality capital they will be required to hold against unforeseen losses.
Three participants in the process told the Financial Times that a solid bloc has coalesced around the idea of graduated charges, although a few countries are still hoping for a flat requirement, the newspaper said.
The FSB is due to propose the criteria for selecting Sifis in July and it will make formal recommendations on the surcharge to the meeting of the heads of the Group of 20 large economies in November.
The Basel Committee of banking regulators has already proposed that banks should raise their Tier 1 capital ratio to at least 7 percent by 2013, as part of the Basel III regulatory framework.
Earlier this week, America's Federal Deposit Insurance Corp Chairman Sheila Bair said U.S. regulators should impose even higher capital requirements on large financial firms until they prove they can be wound down if they became insolvent.
(Editing by Sophie Walker)
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