ICBC told to hold extra capital to avert crisis

Industrial and Commercial Bank of China was added to the list of too-big-to-fail banks as global regulators revised the roster of lenders that must hold extra capital to prevent another financial crisis.

ICBC, the mainland's largest bank by assets, was the only firm joining the updated list of systemically important firms released on Monday by the Financial Stability Board. Lenders whose capital buffers were cut from last year included Citigroup, Deutsche Bank and Bank of New York Mellon, while Credit Agricole was told to add more.

Regulators are ranking financial firms by their potential to cause a global meltdown and demanding bigger financial cushions from them to avert any repeat of the 2008 credit freeze. While ICBC is the world's most profitable lender, bad loans are rising at China's top banks after a five-year credit spree. As for Western companies, Pri de Silva, an analyst at CreditSights, said he was surprised by some of the cuts.

Were these institutions "less interconnected than they were a year ago? That doesn't seem likely", said de Silva. Some lenders might have gone "to the powers that be and made the case that they should be viewed from a different lens".

The revised list leaves only JPMorgan Chase, the largest United States bank by assets, and London-based HSBC, Europe's biggest by market value, in line to face the top 2.5 per cent surcharge. Citigroup and Deutsche Bank must meet a 2 per cent target after previously being in the top category. ICBC's surcharge is 1 per cent, the same as Bank of China, which was already included last year.

BNY Mellon, the world's largest custody bank, also dropped into the 1 per cent cohort. Only Credit Agricole was saddled with an increase, with the surcharge level rising to 1.5 per cent from 1 per cent.