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The
international body based in Basel, Switzerland, was updating its
list of systemic banks, introduced in the aftermath of the
global financial crisis a decade ago when taxpayers had to bail
out struggling lenders.
The addition of Toronto Dominion brings the total number of
systemic banks to 30.
Systemic banks are slotted into one of five buckets, although
the fifth - where banks would be required to hold an extra 3.5%
of capital to risk-weighted assets on top of minimum
requirements - remains empty.
JP Morgan Chase remains the sole occupier of the fourth bucket,
with a 2.5% capital surcharge.
Citigroup and HSBC are in the third bucket, with a 2% surcharge.
Deutsche Bank has dropped from the third to the second bucket,
which has a 1.5% surcharge, in a sign of how the struggling
German lender is shrinking and simplifying its operations.
"This was primarily driven by reductions in leverage, strategic
adjustments in the bank’s business and geographic perimeter and
lower derivative volumes, together with wider industry
developments," Deutsche Bank said in a statement.
Deutsche Bank is, however, still required to meet a 2% extra
capital requirement as a "domestic systemically important bank",
and therefore the overall capital buffer is expected to remain
unchanged, the German bank said.
Toronto Dominion has been placed in the first bucket, with a 1%
surcharge.
Changes to capital requirements come into effect in January
2021.
Banks on the list also face more onerous requirements for
issuing special bonds that can be written down to replenish
capital burned in a crisis to shield taxpayers.
(Reporting by Huw Jones; Editing by Jason Neely and Mark Potter)
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