RBC added to Financial Stability Board list of 30 systemically important banks

By Armina Ligaya

Toronto – The Royal Bank of Canada has been added to the Financial Stability Board’s (FSB) list of global systemically important banks which are too big to fail.

The FSB, which co-ordinates the work of national financial authorities and international standard setting bodies, added RBC as it removed French bank Groupe BPCE to keep the total number of institutions on the list at 30.
“This designation reflects the size and scale of RBC’s global operations,” the lender said in a statement Tuesday.
RBC is the only Canadian bank on the FSB’s list, which includes JP Morgan Chase, Bank of America and Royal Bank of Scotland.

Banks which receive this global systematically important banks (G-SIBs) designation face increased regulatory expectations which are designed to reduce the likelihood of a failure, and the ripple effects on the global economy. That includes a higher capital buffer and higher supervisory expectations.

RBC, which is Canada’s largest bank by market capitalization, says it was ranked in the lowest G-SIB capital surcharge bucket and that it already meets the requirement of a 1% capital buffer.

The bank “does not expect any impact to its capital position with this designation,” RBC added.
The Office of the Superintendent of Financial Institutions said Tuesday that RBC is already subject to its framework for domestically systematically important banks (D-SIBs), and “therefore is well positioned to meet the G-SIB requirements starting in January 2019.”

Canada’s banking regulator in 2013 named the country’s six largest banks, including RBC, as D-SIBs. In turn, the banks were subject to additional requirements such as a capital surcharge, enhanced supervision, and increased disclosure, which OSFI says is generally consistent with the G-SIB requirements.

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