Systemically Important Financial Institutions (SIFIs)
What Are Systemically Important Financial Institutions (SIFIs)?
Systemically Important Financial Institutions, or SIFIs, are a group of 29 large international banks that are required to hold extra equity capital against losses because of their size, complexity and importance to the international financial system. These institutions are generally regarded as "too big to fail," meaning they would require being bailed out by taxpayers if they were threatened with failure during a financial crisis.
The list of institutions has been put together since 2011 by the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS) and national financial authorities. The FSB was created in April 2009 in the wake of the global financial crisis to promote "the reform of international financial regulation and supervision."[1]
The list is primarily made up of central banks and financial regulatory and standard-setting agencies from around the world.[2]
G-SIBs
As of 2018, all of the institutions on the SIFI list are commercial banks, so the correct nomenclature for the group is Global Systemically Important Banks, or G-SIBs. Originally the SIFI list included several large international insurance companies. However, the FSB, together with the International Association of Insurance Supervisors (IAIS) and national authorities, elected not to identify any insurance companies in 2018 "in light of the progress by the IAIS in developing a holistic framework for the assessment and mitigation of systemic risk in the insurance sector."
"Bucket" List
The list of G-SIBs is divided into "buckets" corresponding to the level of "additional common equity loss absorbency as a percentage of risk-weighted assets" each bank must hold. Currently there are no banks in the top bucket, which would require holding 3.5% additional capital.
The current list, as of November 2018, is as follows.
2.5% additional capital:
- JP Morgan Chase
2.0% additional capital:
- Citigroup
- Deutsche Bank
- HSBC
1.5% additional capital:
- Bank of America
- Bank of China
- Barclays
- BNP Paribas
- Goldman Sachs
- Industrial and Commercial Bank of China
- Mitsubishi UFJ FG
- Wells Fargo
1.0% additional capital:
- Agricultural Bank of China
- Bank of New York Mellon
- China Construction Bank
- Credit Suisse
- Groupe BPCE
- Groupe Crédit Agricole
- ING Bank
- Mizuho FG
- Morgan Stanley
- Royal Bank of Canada
- Santander
- Société Générale
- Standard Chartered
- State Street
- Sumitomo Mitsui FG
- UBS
- Unicredit Group[4]
A new list of G-SIBs is released each November, with the next one due in November 2019.[5]
Summary
Systemically Important Financial Institutions, or SIFIs, are a group of 29 large international banks that are required to hold extra equity capital against losses to try to prevent their failure and a government bailout in a financial crisis. These institutions are generally regarded as "too big to fail." They have been designated as SIFIs by the Financial Stability Board (FSB), the Basel Committee on Banking Supervision (BCBS) and national financial authorities since 2011 in response to the global financial crisis. The SIFI list is updated every November.
FXCM Research Team
FXCM Research Team consists of a number of FXCM's Market and Product Specialists.
Articles published by FXCM Research Team generally have numerous contributors and aim to provide general Educational and Informative content on Market News and Products.
References
| Retrieved 07 Jan 2019 https://www.sec.gov/investor/alerts/etfs.pdf | |
| Retrieved 07 Jan 2019 https://www.wsj.com/ad/focusonetfs/history.html | |
| Retrieved 08 Jan 2019 https://www.federalreserve.gov/econres/notes/feds-notes/synthetic-etfs-20170810.htm | |
| Retrieved 08 Jan 2018 https://www.federalreserve.gov/econres/notes/feds-notes/synthetic-etfs-20170810.htm |
Any opinions, news, research, analyses, prices, other information, or links to third-party sites contained on this website are provided on an "as-is" basis, as general market commentary and do not constitute investment advice. The market commentary has not been prepared in accordance with legal requirements designed to promote the independence of investment research, and it is therefore not subject to any prohibition on dealing ahead of dissemination. Although this commentary is not produced by an independent source, FXCM takes all sufficient steps to eliminate or prevent any conflicts of interests arising out of the production and dissemination of this communication. The employees of FXCM commit to acting in the clients' best interests and represent their views without misleading, deceiving, or otherwise impairing the clients' ability to make informed investment decisions. For more information about the FXCM's internal organizational and administrative arrangements for the prevention of conflicts, please refer to the Firms' Managing Conflicts Policy. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.