Resolution Of GSIBs – FSB Final TLAC Principles

On 9 November 2015, the Financial Stability Board (FSB) published its final principles on the loss-absorbing and recapitalisation capacity of global systemically important banks (G-SIBs) in resolution together with a final version of its term sheet (Term Sheet) for total loss-absorbing capacity (TLAC).

For each bank labelled by the FSB as a G-SIB¹, the FSB principles establish minimum levels of loss-absorbing capital that must be held as a percentage of its risk-weighted assets (RWA). Subject to certain conditions, the TLAC requirements can be partially met by tier 1 and tier 2 capital that meets the Basel III minimum capital requirements. However, capital held by G-SIBs for the purpose of complying with the Basel III capital conservation buffer and counter-cyclical capital buffer requirements will not be counted towards the G-SIB's TLAC requirements. The same is true of the supplemental capital conservation buffer requirements prescribed by the FSB for the 30 G-SIBs