Most global significant banks (G-SIBs) will have to meet a
total loss absorbency capital (TLAC) requirement of 18% of the
resolution group’s risk-weighted assets (RWAs) as
from January 1 2022.
Phase-in begins on January 1 2019, as of which a 16% minimum
will apply, the Financial Stability Board (FSB) announced just
days ahead of the G20 meeting, which is expected to formally
agree the standard.
In addition, TLAC must be at least 6.75% of the Basel III
leverage ratio denominator once fully phased in from 2022. This
requirement launches at 6% from 2019.
The new term sheet includes a clearer
timetable for TLAC requirements for banks from emerging
markets. Still, banks from those regions will have
significantly more time to comply.
Emerging markets G-SIBs will have to meet TLAC
equalling 16% RWAs and 6% of the leverage ratio
denominator as of 2025...