Since 2009, the identification of systemically important entities and the implementation of specific supervisory measures applicable to them is on the priority list of global, European and national financial supervisory authorities.
The issue of systemic institutions was put on the agenda of financial supervisory authorities by the G20 during the Pittsburgh Summit, in September 2009, recommending the implementation of specific standards proportionate to the cost of a potential default, with the view of providing a framework for the activity of the most important international financial institutions. The declared aim is to put an end to the moral hazard situation linked to the existence of “too-big-to-fail” or “too-interconnected-to-fail” institutions given the risks they pose to the financial sector and the real economy. Actually, such institutions could hope for a public support in case of difficulties and, thus, be tempted to take more risks.
From 2009, these institutions called Systemically Important Financial Institutions (SIFIs) have been defined as financial institutions whose “distress or disorderly failure, because of their size, complexity and systemic interconnectedness, would cause significant disruption to the wider financial system and economic activity”. This identification is performed at the level of different perimeters where it makes sense, i.e. domestic, regional or global. At the global level, the identification of systemic entities (banking and insurance institutions) has been entrusted to the Financial Stability Board. At the European level, the international methodologies for identifying global or domestic systemically important banks have been transposed into European law through the CRD IV directive (Article 131) providing that “Member States shall designate the authority in charge of identifying, on a consolidated basis, global systemically important institutions”. In France, the authority is the ACPR (see next section).
The identification of systemic institutions allows, in a transparent way, to apply them specific supervisory measures aiming at both reducing the risks posed by these institutions and limiting the moral hazard that results from the implicit public guarantee they receive. Thus, institutions identified as systemic are subject to reinforced supervisory measures, for instance additional capital requirements, starting to enter into force from 2016 for the banking sector and that will be fully effective from 2019.
At the French level, the Autorité de contrôle prudentiel et de resolution is in charge of the identification of systemically important entities. Thus, it determines for the banking sector the list of global systemically important institutions (G-SII) and that of other systemically important institutions (O-SII), as well as the capital buffers associated. For G-SIIs, the ACPR actively participates in the international identification exercise coordinated by the Basel Committee; the identification by the Financial Stability Board (FSB) is legally binding neither in French nor in European law, the list of G-SIBs (cf. next section) published every year by the FSB needs to be published by the ACPR. For O-SIIs, the principles of Basel methodology used in the CRDIV Directive have been specified by guidelines of the European Banking Authority (EBA).
The ACPR also participates in the drafting of the list of global systemically important insurers (G-SIIs).
Analyses et Synthèses n°39 sur " L'identification des groupes bancaires et d'assurance d'importance systémique mondiale
Economic and Financial Debate n°33 on "The Impact of the Identification of GSIBs on their Business Model".
The following table gathers the main information concerning the identification of G-SIIs (global perimeter) and O-SIIs (domestic perimeter).
(Entités d’importance systémique mondiale)
(Autres entités d’importance systémique)
Basel Committee on Banking Supervision (BCBS)
(Global Systemically Important Banks)
(Domestic Systemically Important Banks)
European Banking Authority (EBA)
(Global Systemically Important Institutions)
(Other Systemically Important Institutions)
At the international level, the Basel Committee on Banking Supervision (BCBS) is in charge of coordinating the identification of G-SIBs.
At the European level, the European Banking Authority (EBA) is in charge of coordinating the identification of O-SIIs.
Link to the reporting template : http://www.bis.org/bcbs/gsib/
Data in sections 1 to 13 must be sent to : email@example.com no later than 30 March every year.
The ACPR uses data already transmitted by the institutions in the framework of regulatory reporting.
Official lists of entities and capital buffers associated – in France
Lists of international or European entities
Rules for setting capital buffers
In accordance with Article 32 of the Order of 3 November 2014 on capital buffers of banking service providers and investment firms other than asset management companies (see link below), the consolidated surcharge applying to a group is limited: it cannot exceed the strongest surcharge between that imposed for G-SIIs (up to 3.5% maximum) and that imposed for O-SIIs (up to 2% maximum).
Updated on: 07/16/2018 14:36