On September 30, 2020, the People's Bank of China and the China Banking and Insurance Regulatory Commission issued the "Measures for the Administration of the Total Loss Absorption Capacity of Global Systemically Important Banks (Draft for Comment)" (hereinafter referred to as the "Measures"). The "Measures" are in line with the "Global Systemically Important Banks Total Loss Absorbing Capacity Clause ("TLAC Clause") formulated by the Financial Stability Board (FSB), and aim to ensure that my country's global systemically important banks have sufficient losses when they enter the resolution stage. Ability to absorb and recapitalize to prevent systemic financial risks. The Measures stipulates the total external loss absorbing capacity (TLAC) ratio of my country's global systemically important banks in a step-by-step manner, and stipulates that all capital instruments and non-capital debt instruments that meet the requirements can be used as TLAC instruments.
At this stage, ICBC, ABC, BOC and CCB are my country's globally systemically important banks. This means that the four major banks will issue TLAC tools in batches in the next few years, striving to meet the standard in early 2025. According to estimates by industry insiders, the issuance of TLAC instruments has limited impact on the financial market.
Clear timetable for step-by-step compliance in 2025 and 2028
View more about Too Big to Fail reviews
