Global regulators are set to toughen capital requirements for banks’ holdings of the riskiest types of bundled debt, known as securitizations, while seeking to shield higher-quality paper from overly onerous rules.
Global regulators this week put JPMorgan Chase & Co. and HSBC Holdings Plc at the pinnacle of a list of 29 too-big-to-fail banks that face tougher capital rules than other lenders. The companies were also handed a map to plot their descent.
Twenty percent of Europe’s biggest banks would have failed to meet global capital standards, known as Basel III, as of June 2011, the European Banking Authority said in an impact assessment of the planned rules.
A planned international limit on bank indebtedness will be on the agenda of every meeting of the Basel Committee on Banking Supervision this year as regulators seek to wean lenders off their addiction to debt, according to three people familiar with the talks.
International regulators will next week consider allowing contingent convertible bonds to count toward additional capital requirements for systemically important banks whose failure would roil the global economy.