Royal Bank of Canada (RBC) and Toronto-Dominion Bank (TD) remain Canada’s only global systemically important banks (GSIBs), according to the Financial Stability Board’s (FSB) annual list of banks that require extra attention from regulators.
The number of GSIBs on the FSB’s 2023 list declined by one, from 30 to 29, as Credit Suisse and UniCredit were both removed and China’s Bank of Communications was added.
The FSB publishes an annual list of GSIBs based on an assessment methodology developed by the global group of bank regulators, the Basel Committee on Banking Supervision. The practice was developed in the wake of the global financial crisis, when numerous large banks had to be bailed out by taxpayers for fear that allowing them to fail would severely damage the global financial system.
Banks that are on the list face added capital requirements and extra supervisory attention on the basis that they are large and/or interconnected enough that their failure could have consequences for the global financial system.
The banks on the list are further segmented into buckets, based on their systemic importance, with the most “important” banks attracting the toughest added requirements.
In the latest rankings, there are no banks in the top bucket, and only JP Morgan is in the second bucket. The third bucket only includes Citigroup, HSBC, and Bank of America, with most of the GSIBs in the fourth and fifth buckets. RBC and TD Bank are both in the fifth bucket.
Any shifts between the buckets “largely reflect the effects of changes in underlying activity of banks, with the cross-jurisdictional activity category being the largest contributor to score movements,” the FSB reported.