In addition to complying with the long-term debt and TLAC
requirements, large U.S.
In addition, the exception for TLAC
securities shows the flexibility of the Government to consider sector specific issues.
G-SIB status obliges banks to meet extra common-equity Tier 1 (CET1) requirements, based on their G-SIB bucket, and Chinese G-SIBs face the prospect of having to speed up their TLAC
implementation ahead of the timeline for emerging market G-SIBs.
Under the US rule, TLAC
must be no less than 18 percent, plus relevant buffers (CCB, CCyB, and the GSIB surcharge), of RWA and 9.5 percent of total leverage exposure (meaning on-balance-sheet assets, plus off-balance-sheet exposures).
https://srb.europa.eu/sites/srbsite/files/srb_mrel_approach_2016_post_final.pdf (discussing "the TLAC
standard developed under the aegis of
(48) A rival global approach has been developed by the FSB and is known as the TLAC
In addition, the holding company may not issue short-term debt; (53) instead, the right side of its balance sheet consists entirely of shareholders' equity and long-term debt--its TLAC
, which cannot run.
The Federal Reserve faces this challenge with its focus on total loss-absorbing capacity (TLAC
) as a way to ensure that banks have an adequate capital buffer.
The January issuance brought Citi's total loss-absorbing capacity (TLAC
) to 9%, in line with the Fed requirement that becomes effective in January 2019.
A particular challenge that we have been dealing with for some time, is the impact of regulatory requirements developed for advanced economies that could have adverse effects on the South African banking system and/or financial market, such as the Net Stable Funding Ratio or the proposals being developed around TLAC
. Some of these requirements may be more suitable for developed markets; they may not always be fit-for-purpose in emerging markets such as South Africa nor Africa more generally.
The Plenary discussed the implementation to date of the Total Loss-Absorbing Capacity (TLAC
) standard for banks, and reviewed progress of the work plan enhancing resilience, recovery planning and resolvability of central counterparties (CCPs).
The most recent addition to the regulatory capital tool kit is a requirement that banks meet a minimum ratio for total loss absorbing capital (TLAC
) relative to RWA and total leverage exposure (Federal Reserve Board, 2015).