Citigroup leads US banks higher in global systemic risk list

A pedestrian walks past a Citibank branch in Chicago, Illinois, on Oct 5, 2015.
A pedestrian walks past a Citibank branch in Chicago, Illinois, on Oct 5, 2015. PHOTO: BLOOMBERG/DANIEL ACKER

LONDON (BLOOMBERG) - Global banking regulators said United States lenders present a bigger risk to the financial system than last year and should face stiffer capital requirements to ward off threats.

Citigroup, Bank of America and Wells Fargo all face higher capital surcharges after they rose in the Financial Stability Board's latest ranking of the most systemically important banks in the world. Meanwhile,  Morgan Stanley and United Kingdom lenders HSBC Holdings and Barclays saw their buffer levels fall, the FSB said in a statement on Monday. The new capital buffers apply starting in 2018.

HSBC's capital surcharge falls to 2 per cent of risk-weighted assets from 2.5 per cent, while Citigroup's buffers rise to 2.5 per cent from 2 per cent, the FSB said. Barclays surcharge falls to 1.5 per cent from 2 per cent; Wells Fargo rises to 1.5 per cent from 1 per cent; and the Industrial and Commercial Bank of China surcharge rises to 1.5 per cent from 1 per cent.

The FSB, which is led by Bank of England Governor Mark Carney, coordinates oversight of the most globally systemic banks to ensure they have sufficient capital to withstand losses. The capital surcharges are then implemented by national authorities that are members of the FSB.

The regulator said the changes in the list were the result of better data, changes in activities and supervisors' judgement. The 30 banks on the list are also subject to bank-failure rules, known as total loss-absorbing capacity, that the FSB adopted last year.

Barclays spokesman Will Bowen had no immediate comment on the change. Spokespeople for the other banks that saw their ranking change didn't immediately reply to requests for comment.