Global systemically important bank

A global systemically important bank (G-SIB) is a banking institution judged so large, interconnected, complex, and globally active that its disorderly failure would transmit serious distress across the international financial system — the classic "too big to fail" problem made explicit after the 2008 crisis.

The designation is maintained by the Financial Stability Board (FSB) in consultation with the Basel Committee on Banking Supervision (BCBS) and national authorities. The FSB publishes an updated list of G-SIBs each November. Banks are scored on five broad categories of indicators:

• Size (total exposures)
• Interconnectedness with other financial institutions
• Substitutability of the services they provide (e.g., payments, custody)
• Complexity (derivatives, trading book, level 3 assets)
• Cross-jurisdictional activity

Based on their scores, banks are allocated to "buckets" that determine a higher loss absorbency (HLA) capital surcharge, ranging from 1% to 3.5% of risk-weighted assets in Common Equity Tier 1, on top of the standard Basel III minimums. G-SIBs are also subject to Total Loss-Absorbing Capacity (TLAC) requirements, enhanced resolution planning ("living wills"), and more intensive supervision.

The methodology was first published by the BCBS in November 2011 and revised in 2013 and 2018. The list typically contains roughly 30 banks from the United States, Europe, China, Japan, and the United Kingdom. Examples that have appeared include JPMorgan Chase, HSBC, Citigroup, BNP Paribas, Deutsche Bank, Industrial and Commercial Bank of China, and Mitsubishi UFJ.

The G-SIB framework is paired with a parallel regime for domestic systemically important banks (D-SIBs), administered by national regulators, and for global systemically important insurers (G-SIIs). Critics argue the designation can entrench implicit state guarantees and competitive advantages; supporters contend it internalises the systemic externalities these institutions impose on the global economy.