Japan makes list of ‘too big to fail cos’

Friday, 31 December 2010 01:06 - - {{hitsCtrl.values.hits}}

TOKYO: Japanese regulators have made a list of the top 60 “too big to fail” financial institutions , with Deutsche Bank ranked at the top followed by Goldman Sachs and JPMorgan Chase, Japan’s Mainichi newspaper reported on Wednesday.

The list, compiled by Japan’s Financial Services Agency and the Bank of Japan, includes several Japanese institutions. It ranks Nomura Holdings at 19th, Mitsubishi UFJ Financial Group 24th, Mizuho Financial Group 36th and Daiwa Securities Group 48th, the paper said without citing sources.

With tough new bank rules known as Basel III having been finalised, investors are focusing on which firm’s regulators will deem to be Systemically Important Financial Institutions, or SIFIs.

The newspaper said the Japanese regulators had submitted their list to the Financial Stability Board, which is expected to decide which banks will be named as global SIFIs (G-SIFIs) by the middle of next year, followed by discussions on what additional requirements, including capital surcharges, would be levied on them.

SIFIs are banks that are regarded as “too big to fail”, because their failure would cause significant disruption to the wider financial system and economic activity. Officials at Japan’s Financial Services Agency were not immediately available to comment on the report. Spokesmen for Nomura and Mitsubishi UFJ declined to comment. The Financial Stability Board, hosted by the Bank for International Settlements in Basel, Switzerland, brings together national authorities responsible for financial stability, regulators and central bank experts.

In November, Nomura president Kenichi Watanabe told a conference for corporate executives that he didn’t think the firm would be deemed an SIFI because it didn’t invest money from bank deposits and ranked around 80th among global financial institutions in terms of assets, according to two analysts and one investor who attended the event.