Wednesday, September 30, 2015

Global Regulators Reach Agreement On Bail-In Bonds Plan For Top Banks


Mon., September 28, 2015
Global regulators have reached a draft agreement on a rule on stopping banks from being "too big to fail" by requiring them to hold enough equity capital and bonds to avoid taxpayers being called on in a crisis, Reuters reported. The proposed standard is known as total loss absorbency capacity or TLAC and Bank of England governor Mark Carney -- who chairs the global regulatory Financial Services Board (FSB) -- has described it as the last major reform after the 2007-09 financial crisis forced governments to shore up lenders. The rule will apply to nearly all the 30 big banks that the FSB has deemed to be "globally systemic" such as Goldman Sachs, Deutsche Bank and HSBC. "At today's meeting FSB members discussed the TLAC impact assessments, and agreed the draft final principles and the updated term sheet," the FSB said in a statement late on Friday. The FSB did not publish details of the agreement, but a source familiar with the deal said it mirrored proposals made at a G20 meeting in Ankara earlier this month. That would see the two-stage introduction of a buffer of debt from 2019 that can be "bailed in" to raise equity equivalent to 16 percent of a bank's risk-weighted assets, the source said, rising to 20 percent from 2022.

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