Australian banks not a global risk
(5 November 2012 – Australia) The big four in Australia have escaped extra capital requirements as they are not regarded as "systemically important" enough to the global financial system to be required to carry an extra cushion of capital.
The latest list includes 28 global banks that will be forced to set aside extra funds on their balance sheet to protect from future economic shocks.
Australian banks have the bulk of their assets here and in New Zealand, but while the collapse of any major bank would be significant for the local economy, it would be unlikely to shock the global banking system.
Commonwealth Bank of Australia (CBA) is ranked the 10th-biggest bank in the world based on market capitalisation, with Westpac at number 12 while ANZ is ranked 15 and National Australia Bank (NAB) at 22.
The Swiss-based Financial Stability Board (FSB) has described globally systemically important financial institutions, or G-SIFI's, as 'financial institutions whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity'.
The G-SIFI banks on the list "are required to meet higher supervisory expectations for risk management functions, data aggregation capabilities, risk governance and internal controls", the FSB said in a statement.
Banks on the list will be required to set aside additional capital of between 1 percent and 2.5 percent of their assets, adjusted for risk, on top of the capital required to be held under new Basel III rules.
Australian banks have the bulk of their assets here and in New Zealand, but while the collapse of any major bank would be significant for the local economy, it would be unlikely to shock the global banking system.
Commonwealth Bank of Australia (CBA) is ranked the 10th-biggest bank in the world based on market capitalisation, with Westpac at number 12 while ANZ is ranked 15 and National Australia Bank (NAB) at 22.
The Swiss-based Financial Stability Board (FSB) has described globally systemically important financial institutions, or G-SIFI's, as 'financial institutions whose distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity'.
The G-SIFI banks on the list "are required to meet higher supervisory expectations for risk management functions, data aggregation capabilities, risk governance and internal controls", the FSB said in a statement.
Banks on the list will be required to set aside additional capital of between 1 percent and 2.5 percent of their assets, adjusted for risk, on top of the capital required to be held under new Basel III rules.
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