The FSB has published principles and guides on the adequacy of loss absorption and recapitalization capacity of G-SIBs.
The report on too-big-to-fail (TBTF) published by the FSB in September 2013 identified the need to develop a proposal on loss absorption capacity at the time of resolution as one of the most important issues to be addressed by the FSB to end TBTF.
In this sense, the FSB has developed policy proposals for public consultation which consist of a set of principles on the adequacy of loss absorption and recapitalization capacity of global systemic banks (G-SIBs), and guides to implement these principles under an internationally agreed standard.
The aim of the new requirements on total loss absorbing capacity (TLAC) is to ensure that G-SIBs have the necessary loss absorbing and recapitalization capacity to ensure that, in the event of resolution and immediately thereafter, critical bank functions are maintained without risking taxpayer funds or financial stability.
In Europe, the Bank Resolution and Restructuring Directive (BRRD) requires lenders to comply at all times with certain minimum requirements for own funds and eligible liabilities (MREL) in order to prevent them from structuring their liabilities so as to prevent internal recapitalization.
Below is an executive summary and main characteristics of the principles that G-SIBs will have to implement.
The FSB has established a new total loss absorption capacity (TLAC) requirement in addition to the Basel capital requirements and applicable to all G-SIBs.
Scope of application
Download the technical note by clicking here (only in Spanish).
Latest technical notes released:
|Non-performing loans (NPLs) framework|
|Final Guidelines on ICAAP and ILAAP information collected for SREP purposes / Supervisory expectations and Draft Guides to the ICAAP and ILAAP|
|Overview of the impacts and potential lines of action after the Basel III reform|
|Basel III: Finalising post-crisis reforms|
|Guidelines on PD estimation, LGD estimation and the treatment of defaulted exposures|
© GMS Management Solutions, S.L., 2018. All rights reserved. The information contained on this publication is of a general nature and does not constitute a professional opinion or an advisory service. The data used in this publication come from public sources. GMS Management Solutions, SL assumes no liability for the veracity or accuracy of such data.