Primer of the month: Big but small

Author: John Crabb | Published: 5 Mar 2018

A recent US Senate bill has proposed raising the G-Sib threshold

Global systemically important banks (G-sibs) were identified by the Financial Stability Board (FSB) in 2011 following the financial crisis three years previously. The 29 institutions initially designated as G-sibs were subject to additional capital requirements because they were deemed too big to fail (TBTF), as set out in the Basel III regulatory framework. The most recent list, from November 2017, includes 30 banks.

What are Sifis? In the US there are also systemically important financial institution (Sifis) which are a similar, but a separate category of both banking and non-banking organisations designated as TBTF under section 113 of the Dodd-Frank Act. Dodd-Frank created the Financial Stability Oversight Council (FSOC), giving it the authority to designate Sifis and impose additional regulatory oversight. Sifis are a post-financial crisis concept to identify the financial institutions with the biggest systemic footprint, and then impose...