FSB confirms Total Loss Absorbing Capacity for banks - PwC response

Published at 14:55 PM on 09 November 2015

In response to today's Financial Stability Board (FSB) announcement setting Total Loss Absorbing Capacity (TLAC) for large global banks, Richard Barfield, a financial services risk and regulation director at PwC, commented:

"TLAC is one of the last bricks in the wall of the post-crisis reform agenda for large global banks (GSIBs) which will welcome the certainty provided by today's announcement. TLAC is intended as a "resolution insulator" for GSIBs - aiming to protect the taxpayer from the cost of resolution.

"Many GSIBs will now resume the debt issuance that has been put on hold while waiting for today's details. One main remaining uncertainty is the level of additional requirements that may be imposed by local regulators - as introduced by the Swiss authorities and proposed by the US Fed. In Europe, banks await final details of Minimum Requirement of own funds and Eligible Liabilities (MREL) which will apply to all EU-regulated banks.

"The FSB's impact analysis shows that most GSIBs should be able to meet the requirements of TLAC at 16% of Risk-Weighted Asset by 2019 and 18% by 2022. The FSB also believes that the impact of increased financing costs on bank profitability should be manageable. However, we expect that some banks will face greater challenges than others."

Ends

Media contact:

Katherine Howbrook, PwC media relations,  Tel: 020 7212 2711, Email: [email protected]


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