JPMorgan and HSBC topped the list of the world's top 29 banks that must hold extra capital from 2016 because of their size and reach, the Financial Stability Board (FSB) said on Monday.
Industrial & Commercial Bank of China was added to the list of too-big-to-fail banks as global regulators revised the roster of lenders that must hold extra capital to prevent another financial crisis.
The list of nine too-big-to-fail insurers was published late Friday by the Financial Stability Board, the Basel, Switzerland-based body set up by the Group of 20 nations.
American International Group (AIG), the first non-bank to disclose it’s under consideration to be labeled a potential risk to the financial system, said it won’t contest such a designation, which could lead to tighter capital rules.
The shadow banking industry has grown to about $67 trillion, $6 trillion bigger than previously thought, leading global regulators to seek more oversight of financial transactions that fall outside traditional oversight.
Banks deemed to be too-big-to-fail should hold more capital reserves to protect against operational risks, such as rogue traders, regulatory fines and fraudulent employees, the Financial Stability Board said.
The Financial Stability Board has published a provisional list of 29 firms deemed 'too-big-to-fail', and who will be required to hold a bigger capital cushion than rivals to make it less likely they will get into trouble.