The list of Systemically Important Financial Institutions (SIFIs)

Leonardo da Vinci - Gearings

A systemically important financial institution (SIFI) is a bank, insurance company, or other financial institution whose failure could trigger a global financial crisis. As the 2007-2012 global financial crisis has unfolded, the international community has moved to protect the global financial system through preventing the failure of SIFIs, or, if one does fail, limiting the adverse effects of its failure.

The Basel Committee on Banking Supervision introduced new regulations (known as Basel III) that also specifically target SIFIs. The main focus of the regulations is to increase bank capital requirements and to introduce capital surcharges for systemically important banks.

The Financial Stability Board has just updated in November its list of global systemically important financial institutions (G-SIFIs).

The FSB defines SIFIs as "financial institutions whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity."

The Financial Stability Board, made up of regulators, central bankers and representatives of international bodies, plans to update its list of G-SIFIs every November, and the methodology for determining which banks are systemic will also be reviewed every three years.

Banks on the list will be required to hold additional capital equal to between 1 per cent and 2.5 per cent of their assets, adjusted for risk, on top of the Basel III minimums, for a total ratio of 8 per cent to 9.5 per cent, starting in 2016.

The full list of banks and corresponding surcharges is below (source: global systemically important financial institutions, FT November 1, 2012).

2.5%: Citigroup, Deutsche Bank, HSBC, JPMorgan Chase

2.0%: Barclays, BNP Paribas

1.5%: Bank of America, Bank of New York Mellon, Credit Suisse, Goldman Sachs, Mitsubishi UFJ FG, Morgan Stanley, Royal Bank of Scotland, UBS

1.0%: Bank of China, BBVA, Groupe BPCE, Group Crédit Agricole, ING Bank, Mizuho FG, Nordea, Santander, Société Générale, Standard Chartered, State Street, Sumitomo Mitsui FG, UniCredit Group, Wells Fargo