The Basel Committee's overseeing body, the Group of
Governors and Head of Supervision, has agreed on measures requiring
globally systemically important banks (G-SIBs) to
hold additional capital.
According to the announcement, a G-SIB will be required to hold
an additional 1% to 2.5% Common Equity Tier 1 (ie.
shareholder's equity and retained earnings), depending on its
systemic importance. This surcharge will be on top of the minimum
4.5% Common Equity Tier 1 capital requirement for all banks imposed
under Basel III. These surcharges will be phased in from 1 January
2016 and will become fully effective on 1 January 2019.
Banks will be assessed on five broad categories to determine
their systemic importance: size, interconnectiveness, lack of
substitutability, global (cross-jurisdictional activity) and
complexity.
