TLAC

Agencies Finalize Rule to Reduce the Impact of Large Bank Failures

Posted on

 

On October 20, the federal bank regulatory agencies finalized a rule to limit the impact of the failure of large banking organizations. The final rule requires a more stringent regulatory capital treatment for holdings of total loss-absorbing capacity (TLAC) debt, which is issued by U.S. global systemically important bank holding companies (GSIBs). This is intended to discourage large banking organizations from purchasing such debt and reduce the interconnectedness between large banking organizations. The final rule is effective on April 1, 2021. Release. 

FSB Consults on Total Loss-Absorbing Capacity for G-SIBs

Posted on

On November 10, the Financial Stability Board (FSB) published a consultation paper on proposals on the adequacy of total loss-absorbing capacity (TLAC) of global systemically important banks (G-SIBs) in resolution.

In the consultation, the FSB seeks views on principles on loss absorbing capacity of G-SIBs in resolution, covering issues such as the calibration of the amount of TLAC required, the determination of TLAC-eligible instruments and the consequences of breaches of the requirement.  The deadline for responses to the consultation is February 2, 2015.