RBS, Nordea Drop Out of FSB's Global List of Systemic Banks

(Bloomberg) -- Royal Bank of Scotland Group Plc and Nordea Bank Abp dropped out of a global regulator’s ranking of banks that pose the biggest threat to the financial system.

Falling out of the list compiled by the Financial Stability Board could bring with it a lower capital surcharge for both banks if their European supervisors follow the global regulator’s recommendations. The capital demands set out by the FSB aren’t legally binding, and some countries, notably the U.S., have imposed higher requirements.

JPMorgan Chase & Co. retains it status as the world’s most systemically important bank, according to the FSB’s list published on Friday.

Removal from the global list reflects RBS’s progress in “building a much simpler, safer U.K.-focused bank,” said a spokesperson for the bank. A Nordea spokesman said the FSB’s decision is “natural,” because the bank is “too small” to remain in the ranking.

Here are the other main moves compared with the FSB’s 2017 list:

  • Bank of America Corp. falls one level in the list, and now has a recommended capital surcharge of 1.5 percent of risk-weighted assets
  • China Construction Bank also falls one level and faces a 1 percent surcharge
  • France’s Groupe BPCE joins the list with a 1 percent surcharge, the lowest level

The FSB standards apply to lenders deemed to present the biggest and most complex risks to the financial system in the aftermath of the 2008 crisis. Banks have spent years preparing for the additional capital requirements, which are reassessed annually.

Under European Union law, banks identified as global systemically important institutions can be required to have a buffer as high 3.5 percent. EU supervisors can impose any of three buffers aimed at covering a big bank’s systemic risk, the highest of which will apply.

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