appConfigEntityId

bodyType

customContents

entityId

entityUuid

isVideo

articlePageQuery

article

articleSchemaContent

content

hooksArticlePageAdvertisementConfigArticle

appConfig

filter

json

liveArticle

Reuters

Global regulators proposed new rules yesterday to ensure that bank creditors rather than taxpayers pick up the bill when a big lender collapses.
Mark Carney, the chairman of the Financial Stability Board and Bank of England governor, said the plans marked a watershed in ending banks that were too big to be allowed to fail.
"Once implemented, these agreements will play important roles in enabling globally systemic banks to be [wound down] without recourse to public subsidy and without disruption to the wider financial system," Carney said.
After the 2007-09 financial crisis, governments had to spend billions of dollars of taxpayer money to rescue banks that ran into trouble and could have threatened the global financial system if allowed to go under.
Since then, regulators from the Group of 20 economies have been trying to find ways to prevent this happening again.
The plans envisage that global banks such as Goldman Sachs and HSBC Holdings should have a buffer of bonds or equity equivalent to at least 16 to 20 per cent of their risk-weighted assets, including loans, from January 2019.
These bonds would be converted to equity to help shore up a stricken bank. The banks' total buffer would include the minimum mandatory core capital requirements banks must already hold to bolster their defences against future crises.
The new rule will apply to 30 banks the regulators have deemed to be globally "systemically important", although initially three Chinese banks on that list would be exempt.
G20 leaders are expected to back the proposal in Australia later this week. It is being put out to public consultation until February 2 next year.
Carney said he was confident the new rule would be applied as central banks and governments had a hand in drafting them.
"This isn't something that we cooked up in Basel tower and are just presenting to everybody," he said, referring to the FSB's headquarters in Switzerland.
Breaches should be punished by curbing dividends and bonuses, the FSB said, adding that most banks would need to sell more bonds to comply with the rules.


New rules put an end to 'too big to fail' banks

Financial Stability Board chairman Mark Carney says the plans marked a watershed in ending banks that were too big to be allowed to fail. Photo: Reuters

No more bank bailouts, says Mark Carney

Mark Carney speaking in Basel yesterday. Photo: Reuters

Business

Banking & Finance

Global regulators proposed new rules to ensure that bank creditors rather than taxpayers pick up the bill when a big lender collapses.


New rules put an end to 'too big to fail' banks

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Global regulators proposed new rules to ensure that bank creditors rather than taxpayers pick up the bill when a big lender collapses.

Global regulators proposed new rules to ensure that bank creditors rather than taxpayers pick up the bill when a big lender collapses.