Change in the ranking of global systemic banks (G-SIBs). As every year, the Financial Stability Board (FSB) updated the list of establishments to which additional capital requirements (G-SIB buffer) apply under the Basel rules. If the thirty banks considered systemic remain unchanged, some tumble one step in this ranking.
This is the case of BNP Paribas, which has moved from category 3 to category 2 (“bucket 2”). Last year, the French bank had gone up a notch. The FSB establishes this ranking each year based on the profile of the activities of world-class banks. He states that he took into account the “Advances in the European Banking Union”particularly with regard to cross-border activities.
BNP Paribas joins Deutsche Bank, Barclays, Goldman Sachs, Bank of China, Industrial and Commercial Bank of China and Mitsubishi UFJ FG in Tier 2. The level of additional capital required for the French bank is reduced from 2% to 1 .5% of risk-weighted assets (RWA).
High prudential ratios
As of June 30, 2022, BNP Paribas’ CET 1 capital ratio reached 12.1%, compared to 12.2% a year earlier. Its TLAC (total loss absorbency capital) ratio reached 26.7%, or 460 basis points above the additional requirements required by the Basel framework. These include the cushion applicable to systemic banks, the capital conservation cushion, the countercyclical capital cushion determined by the High Council for Financial Stability in France (4 basis points in the third quarter of 2022) as well as a for systemic risk applied to the group due to its exposure to mortgage loans in Belgium (8 basis points in the third quarter).
BNP Paribas is not the only one to change category. China Construction is downgraded from Tier 2 to Tier 1 (to which a surcharge of 1% of risk-weighted assets applies). Other French banksBPCE, Crédit Agricole and Société Générale are also included in this category.
Bank of America moves up a notch to category 3, joining Citigroup and HSBC. The top of the ranking remains occupied by JP Morgan Chase, the only bank to appear in category 4 (with a capital surcharge of 2.5%).