Asian banks systemic risk on the rise
02 January 2018 Washington DC
Image: Shutterstock
The systemic importance of Asian banks on the global stage has increased for second consecutive year, according to the Office of Financial Research (OFR).
The OFR indicated with its latest data report on global systemically important banks (G-SIBs) that the scores of Bank of China and China Construction Bank in particular, 鈥渞ose enough to put them in a higher capital bucket because of their increased interconnectedness and complexity.鈥�
According to the OFR, the systemic importance scores for three Japanese G-SIBs increased even more than the score of the Bank of China.
The OFR noted that these banks will not see their capital requirements change, because they did not move to different 鈥榖uckets鈥�.
National authorities, such as the US Federal Reserve, use these groupings to determine how much more capital each bank must hold.
The report utilised data updated Basel Committee on Banking Supervision (BCBS) last November, which showed that US banks鈥� systemic footprint still dominated the global totals.
The OFR used the BCBS鈥檚 data to update its G-SIBs scores interactive chart.
For North America, JPMorgan Chase had the strongest G-SIB scores from 2014 to 2016.
OFR reported that shifts in most G-SIBs鈥� systemic importance scores 鈥渄id not see much change, though Citigroup鈥檚 score and capital requirement decreased from 2016 because the bank rated as less interconnected and complex鈥�.
The three largest US bank holding companies by total assets and exposures are JPMorgan Chase, Bank of America and Wells Fargo, respectfully.
OFR stated: 鈥淔or US non-G-SIB banks, the data continues to support the use of systemic importance metrics rather than asset size alone to set thresholds for heightened regulation.鈥�
Elsewhere, Royal Bank of Canada was added; it is the first Canadian bank to be designated as a G-SIB, France鈥檚 Groupe BPCE was dropped from the list.
OFR said that its analysis 鈥渇urther highlights the value of considering multiple systemic indicators, not just size.鈥�
The OFR explained that though JPMorgan Chase ranked first or second in most comparative data, its SRISK, a market-based systemic risk measure, 鈥渨as negligible鈥�.
The OFR indicated with its latest data report on global systemically important banks (G-SIBs) that the scores of Bank of China and China Construction Bank in particular, 鈥渞ose enough to put them in a higher capital bucket because of their increased interconnectedness and complexity.鈥�
According to the OFR, the systemic importance scores for three Japanese G-SIBs increased even more than the score of the Bank of China.
The OFR noted that these banks will not see their capital requirements change, because they did not move to different 鈥榖uckets鈥�.
National authorities, such as the US Federal Reserve, use these groupings to determine how much more capital each bank must hold.
The report utilised data updated Basel Committee on Banking Supervision (BCBS) last November, which showed that US banks鈥� systemic footprint still dominated the global totals.
The OFR used the BCBS鈥檚 data to update its G-SIBs scores interactive chart.
For North America, JPMorgan Chase had the strongest G-SIB scores from 2014 to 2016.
OFR reported that shifts in most G-SIBs鈥� systemic importance scores 鈥渄id not see much change, though Citigroup鈥檚 score and capital requirement decreased from 2016 because the bank rated as less interconnected and complex鈥�.
The three largest US bank holding companies by total assets and exposures are JPMorgan Chase, Bank of America and Wells Fargo, respectfully.
OFR stated: 鈥淔or US non-G-SIB banks, the data continues to support the use of systemic importance metrics rather than asset size alone to set thresholds for heightened regulation.鈥�
Elsewhere, Royal Bank of Canada was added; it is the first Canadian bank to be designated as a G-SIB, France鈥檚 Groupe BPCE was dropped from the list.
OFR said that its analysis 鈥渇urther highlights the value of considering multiple systemic indicators, not just size.鈥�
The OFR explained that though JPMorgan Chase ranked first or second in most comparative data, its SRISK, a market-based systemic risk measure, 鈥渨as negligible鈥�.
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