Monday 21 November 2016 12:12 pm

Citi and JP Morgan top regulators' list of systemically important banks, as HSBC and Barclays move to lower tier

Citigroup has joined JP Morgan Chase as one of the world's top two "systemically important banks", according to an updated list published today by the Financial Stability Board (FSB).

Banks in the top tier will have to hold 2.5 per cent of their assets as buffer capital in case of another crisis. This means that US bank Citi will have to increase its buffer capital by 0.5 per cent from January 2018, which could potentially weigh on profits.

All banks on the list have been identified as systemically important, which means their collapse could pose a risk to financial stability.

HSBC moves out of the top group, which means that its required levels of additional capital will fall by 0.5 per cent. No banks joined or left the list since last year.

Read more: Three things banks want from Wednesday's Autumn Statement

Bank of America moved up to the second tier. Industrial and Commercial Bank of China (ICBC) and Wells Fargo (fresh from its retail misselling scandal) were the other banks to move up the ranks of systemic importance.

Barclays and Morgan Stanley were the other movers, each going down a tier. See below for the entire list.

Other UK banks on the list included Royal Bank of Scotland and Standard Chartered.

The Basel-based FSB was established in the wake of the financial crash to avoid the massive bank failures and subsequent bailouts which characterised the crisis. It aims to coordinate financial supervisory bodies across the world to strengthen regulation of the global financial system.

The FSB designates five “buckets”, in which each bank is required to hold capital from one per cent to a possible 3.5 per cent (although no banks hold the latter designation).

The FSB also published its updated list of systemically important insurers, although there were no changes from last year.

BucketRequired buffer capital Banks
5 3.5 per cent None
4 2.5 per cent Citigroup (moved up); JP Morgan Chase
3 2.0 per cent HSBC (moved down); Bank of America (moved up); BNP Paribas; Deutsche Bank
2 1.5 per cent Barclays (moved up); Industrial and Commercial Bank of China Limited (moved up); Wells Fargo (moved up); Credit Suisse; Goldman Sachs; Mitsubishi UFJ FG
1 1.0 per cent Morgan Stanley (moved down); Agricultural Bank of China; Bank of China; Bank of New York Mellon; China Construction Bank; Groupe BPCE; Groupe Crédit Agricole; ING Bank; Mizuho FG; Nordea; Royal Bank of Scotland; Santander; Société Générale; Standard Chartered; State Street; Sumitomo Mitsui FG; UBS; Unicredit Group