Earlier today, the Financial Stability Board (the “FSB”) approved and the Basel Committee on Banking Supervision (the “Basel Committee”) published a new set of regulatory guidelines for domestically systemically important banks (“D-SIBs”). This framework follows the publication almost a year ago of a process for identifying and supervising globally systemically important banks (“G-SIBs”). Today’s document similarly provides for enhanced regulation of D-SIBs, although it appears to be somewhat less stringent and prescriptive than that for G-SIBs. For example, the D-SIB Framework calls for an additional loss absorbency requirement but does not offer any specifics as the G-SIB Framework does.
A D-SIB is a banking organization whose failure or impairment would have external effects that would damage the real economy. The purpose of the D-SIB Framework is to limit those effects, as well as the likelihood of failure or impairment, through better supervision, risk management, and, if necessary, higher capital requirements.
Please see full publication below for more information.