On November 9, 2015, the Financial Stability Board published the final Total Loss Absorbing Capacity standard for Global Systemically Important Banks, following its November 2014 consultative document. The standard aims to ensure that G-SIBs have sufficient loss absorbing and recapitalisation capacity so that national regulators are able to implement orderly resolution with minimal impact on financial stability, while maintaining continuity of firms' critical functions, and avoiding exposing public funds to potential loss. G-SIBs will be required to meet a minimum TLAC requirement of at least 16% of the G-SIB group's Risk-Weighted Assets as of January 1, 2019 and a minimum of 18% as of January 1, 2022. Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator (i.e., the TLAC Leverage Ratio Exposure minimum) as of January 1, 2019 and at least 6.75% as of January 1, 2022. G-SIBs headquartered in emerging markets will be required to meet the 16% RWA and 6% TLAC LRE minimum requirements by January 1, 2025 and the 18% RWA and 6.75% TLAC LRE minimum requirements by January 1, 2028. The FSB will monitor the implementation of the TLAC standard and aims to conduct a formal review of technical implementation by the end of 2019.
The press release and final standard are available at: http://www.financialstabilityboard.org/2015/11/tlac-press-release.
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