JP Morgan Selected as the Most Important Bank for the Health of the Financial System


London — JP Morgan Chase has once again been named the World’s Most Important Bank for the Health of the Broader Financial System, according to the latest annual rankings of top lenders by global regulators.

The Financial Stability Board (FSB), which consists of regulators from the G20 countries, released the latest table of 30 of the world’s most systematic banks on Tuesday.

The 30 lenders are divided into four “buckets” in the order of systematic, international, interconnect, complexity, and JP Morgan is currently in a higher bucket than the nearest peer.

Last year, the bank, which was also the world’s most systematic lender in 2019, shared the best buckets with HSBC and Citigroup, but is now alone in the next empty bucket.

BNP Paribas and Goldman Sachs have also been declared more systematic, both moving up one bucket.

Being included in the table means that taxpayers need to hold additional capital and receive stronger supervision to avoid repeated taxpayer bailouts in the banking crisis more than a decade ago. .. In reality, lenders usually have a capital buffer that already exceeds the FSB requirements.

According to bank submissions, JP Morgan’s core capital adequacy ratio was 12.9% of capital at the end of September, well above the Federal Reserve’s minimum of 11.3%.

FSB’s capital surcharge to JP Morgan has increased from 2% last year to 2.5%.

US banks have been aggressively fighting the FSB’s capital surcharges, if at all, but are unlikely to make significant progress under President Joe Biden’s control.

However, the FSB has provided a bailout outlook on how eurozone banks are considering exposure to other countries within the block.

Exposure to other eurozone countries should be considered “cross-border”, as all eurozone lenders claim to be regulated by the European Central Bank under the EU Banking Union. No, it is being treated more severely.

The FSB announced on Tuesday that the Basel Committee on Banking Capital Regulations, which develops global banking capital rules, will conduct a short-term review of cross-border exposure within banking unions in relation to the list of the most systematic lenders. ..

Hugh Jones