On 9 November 2015, the Financial Stability Board (FSB) published its final principles on the loss-absorbing and recapitalisation capacity of global systemically important banks (G-SIBs) in resolution together with a final version of its term sheet (Term Sheet) for total loss-absorbing capacity (TLAC).

For each bank labelled by the FSB as a G-SIB1, the FSB principles establish minimum levels of loss-absorbing capital that must be held as a percentage of its risk-weighted assets (RWA). Subject to certain conditions, the TLAC requirements can be partially met by tier 1 and tier 2 capital that meets the Basel III minimum capital requirements. However, capital held by G-SIBs for the purpose of complying with the Basel III capital conservation buffer and counter-cyclical capital buffer requirements will not be counted towards the G-SIB’s TLAC requirements. The same is true of the supplemental capital conservation buffer requirements prescribed by the FSB for the 30 G-SIBs (i.e., between 1% and 3.5% of RWAs). Banks designated as G-SIBs before the end of 2015, other than banks headquartered in an emerging market economy (EME), must meet a minimum TLAC requirement as from 1 January 2019 of at least 16% of risk-weighted assets and at least 6% of the Basel III leverage ratio denominator. As from 1 January 2022, such firms must maintain minimum TLAC requirements of at least 18% RWA and at least 6.75% of the Basel III leverage ratio denominator.