International regulators said Nov. 4 that 29 firms would be considered systemically important to the world economy and face a capital surcharge of between 1% to 2.5%.
The much-anticipated report by the Basel Committee on Banking Supervision offered details on how it arrived at its designations. The announcement also put to rest rumors that the panel was considering naming around 50 banks as global systemically important financial institutions or G-SIFIs.
The report was released in conjunction with the G-20 meeting being held in Cannes, France. The committee said it would initially apply the capital surcharge by November 2014. It again warned that institutions that increase their systemic risk could face a surcharge of as much as 3.5%, but said no institution was currently in that category. The surcharges are on top of a 7% common equity capital requirement established under the Basel III proposal.
The new capital rules will be fully phased in by January 2019.
The committee also defended its decision to maintain the surcharge on the largest, most complex institutions saying the economic benefits would outweigh any modest temporary decline in gross domestic national product.