IAFEI Quarterly - 31st Issue

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The Financial Stability Board (FSB) today issued the final
for global systemically important banks (G-SIBs).
The TLAC standard has been designed so that failing G-SIBs will have sufficient loss-
absorbing and recapitalisation capacity available in resolution for authorities to implement an
orderly resolution that minimises impacts on financial stability, maintains the continuity of
critical functions, and avoids exposing public funds to loss.
The TLAC standard defines a minimum requirement for the instruments and liabilities that
should be readily available for bail-in within resolution at G-SIBs, but does not limit
authorities’ powers under the applicable resolution law to expose other liabilities to loss
through bail-in or the application of other resolution tools.
The FSB released for consultation a proposed standard on TLAC in November 2014 in
consultation with the Basel Committee on Banking Supervision (BCBS). The final standard
reflects changes made following the public consultation and comprehensive impact
assessment studies. The results of the impact assessment studies are published today
alongside the final TLAC standard, and the BCBS has today separately released a
consultative document on TLAC holdings.
Mark Carney, Chair of the FSB said “The FSB has agreed a robust global standard so that
G-SIBs can fail without placing the rest of the financial system or public funds at risk of loss.
This new standard, which will be implemented in all FSB jurisdictions, is an essential element
for ending too-big-to-fail for banks. The economic impact assessments conducted as part of
the detailed policy work shows that the economic benefits of the final standard far outweigh
the costs.”
G-SIBs will be required to meet the TLAC requirement alongside the minimum regulatory
requirements set out in the Basel III framework. Specifically, they will be required to meet a
Minimum TLAC requirement of at least 16% of the resolution group’s risk-weighted assets
(TLAC RWA Minimum) as from 1 January 2019 and at least 18% as from 1 January 2022.
Minimum TLAC must also be at least 6% of the Basel III leverage ratio denominator (TLAC
Leverage Ratio Exposure (LRE) Minimum) as from 1 January 2019, and at least 6.75% as
from 1 January 2022.
Press release Press enquiries:
+41 61 280 8138
Ref: 74/2015
9 November 2015
FSB issues final Total Loss-Absorbing Capacity standard for global
systemically important banks
IAFEI Quarterly | Issue 31 | 57