The Financial Stability Board has increased the capital requirements of three banks deemed systemically important (BNP Paribas, Goldman Sachs and JPMorgan Chase) as part of its annual review of the measures it has identified to try to prevent another global financial crisis.
The board, a board led by central bankers and other government officials from around the world, has released its latest report. List of “systemic banks globally” known as G-SIBsOn Tuesday, it kept the total number steady at 30 institutions, but BNP, Goldman, and JPMorgan changed their categorization. All three were already on the list, but each will now have to meet a 0.5 percent higher standard than last year to cover losses on their balance sheets.
JPMorgan and Goldman already meet the board’s requirements. The so-called G-SIB surcharge that the Federal Reserve imposes on every bank under its administration. equity requirements exceeds the updated number of the stability board. The Fed does not apply its own G-SIB surcharge to foreign banks, so it does not hold the Paris-based BNP to the same standard.
A spokesperson for JPMorgan noted that the bank exceeded the terms of the stabilization board. Goldman Sachs and BNP spokespersons declined to comment.
The stabilization board said in a statement posted on its website that the change reflects a shift in the activities of each of the banks, but did not elaborate. The pandemic has wreaked havoc on the balance sheets of banks around the world as governments embark on stimulus efforts to protect their economies from recession during lockdowns and other security measures that dampen normal economic activity.