Global systemically important banks (G-SIBs) are banks whose failure would threaten the world financial system, listed yearly by the FSB. Other systemically important institutions (O-SIIs) are identified nationally in the EU. Both carry extra capital buffers, and G-SIBs must also meet TLAC.
Capital buffersCapital buffers are CET1 requirements on top of the Pillar 1 and Pillar 2 minimums: the capital conservation buffer, the countercyclical buffer, and buffers for systemic banks and systemic risk. Together they form the combined buffer requirement. A bank that uses them faces limits on distributions.
TLAC (Total Loss-Absorbing Capacity)TLAC is the Financial Stability Board standard requiring global systemically important banks to hold loss-absorbing capital and debt of at least 18% of risk-weighted assets and 6.75% of the leverage exposure. The EU applies it through the CRR and aligns it with MREL.
Leverage ratioThe leverage ratio is Tier 1 capital divided by total exposure, measured without risk weights and including off-balance-sheet items. The EU minimum is 3%, with an extra buffer for global systemically important banks. It is a backstop against risk weights that turn out too low.
Capital buffersCapital buffers are CET1 requirements on top of the Pillar 1 and Pillar 2 minimums: the capital conservation buffer, the countercyclical buffer, and buffers for systemic banks and systemic risk. Together they form the combined buffer requirement. A bank that uses them faces limits on distributions.
TLAC (Total Loss-Absorbing Capacity)TLAC is the Financial Stability Board standard requiring global systemically important banks to hold loss-absorbing capital and debt of at least 18% of risk-weighted assets and 6.75% of the leverage exposure. The EU applies it through the CRR and aligns it with MREL.