G-20 to consider list of 50 banks important to global economy

Tuesday, 18 October 2011 00:00 - - {{hitsCtrl.values.hits}}

PARIS: Group of 20 governments are considering naming as many as 50 banks as systemically important to the global economy and in need of extra capital, two officials from G-20 nations said.

The list, drawn up by Financial Stability Board Chairman Mario Draghi, will be published in time for a G-20 leaders meeting in Cannes, France, on November 3-4, said the officials, who declined to be identified because the discussions are private.

Regulators have said the banks named will be forced to take on more capital. Regulators are at loggerheads with some institutions over the additional capital rules, with lenders arguing the requirements may harm the world’s economic recovery.

Jamie Dimon, chief executive officer of JPMorganChase & Co, and Bank of America CEO Brian T Moynihan are among bankers who have suggested this year that the new rules will constrain lending and hurt growth. G-20 finance ministers and central bankers meeting in Paris on Saturday discussed the standards that will be applied when compiling the list of systemic banks.

Twenty-nine to 40 banks could be designated depending on the potential impact on financial markets, according to one person familiar with the matter.

Two officials from G-20 nations said the list could even be expanded to about 50 institutions. The regulators are also contemplating including the institutions in categories according to their ability to absorb losses.

French Finance Minister Francois Baroin confirmed at a news conference that the G-20 members will publish a list of the systemic institutions at the Cannes summit next month.

In its communique, the G-20 said it endorsed a framework to reduce the risks posed by systemically important institutions through strengthened supervision, a cross-border resolution plan and additional capital requirements.