Poll: TLAC’s biggest implementation challenge

Author: Ashley Lee | Published: 23 Apr 2015

The FSB’s consultation on total loss-absorbing capacity is the last significant piece of post-crisis reform. But concerns remain around its implementation

What will be the biggest challenge for implementing TLAC?
The Financial Stability Board's (FSB) consultation on total loss-absorbing capacity (TLAC) is thought to be the last major development in post-financial crisis regulation. Of course that precludes adjustments to the liquidity coverage ratio (LCR) and net stable funding ratio (NSFR) following TLAC's implementation, as well as further scrutiny of banks' internal models for calculating their regulatory capital ratios. But those developments aside, TLAC is the final piece of the global regulatory puzzle.

The standard is intended to provide additional capital to failing banks by absorbing losses through write-downs, forgiveness or conversion into common equity. It will apply to banks designated as global systemically important banks (G-Sibs) by the FSB.

The consultation period opened last November and closed in February,...