Asia’s Industrial and Commercial Bank of China is now on a list of banks that face higher capital requirements due to the potential risk they may pose the financial system.

Asia’s Industrial and Commercial Bank of China is now on a list of banks that face higher capital requirements due to the potential risk they may pose the financial system. ICBC was the only bank to be added to the table of “global systemically important banks” from the Basel, Switzerland-headquartered Financial Stability Board.

On the FSB’s website, its latest list of GSIBs put JP Morgan and HSBC in the most severe positions (“bucket 4”), both requiring an additional loss absorbency of 2.5 per cent.

According to the Financial Times, ICBC already faces tougher capital requirements from Chinese regulators; the designation as systemically important at the global level should not affect its operations, it said. The China Banking Regulatory Commission has demanded that the country’s biggest banks hold 8.5 per cent of equity to risk-weighted assets, whereas ICBC’s new global status sets the level at 8 per cent, the FT said.

In the list of banks, next in line behind JP Morgan and HSBC are Barclays, BNP Paribas, Citigroup, Deutsche Bank, which are grouped in “bucket 3”, defined as requiring an additional loss absorbency of 2.0 per cent. In the case of banks requiring additional loss absorbency of 1.5 per cent (bucket 2 are Bank of America; Credit Suisse; Goldman Sachs; Group Crédit Agricole; Mitsubishi UFJ FG; Morgan Stanley; Royal Bank of Scotland and UBS.

In “bucket 1”, where only an additional 1.0 per cent of loss absorbency is required, are Bank of China; Bank of New York Mellon; BBVA; Groupe BPCE; Industrial and Commercial Bank of China Limited; ING Bank; Mizuho FG; Nordea; Santander; Société Générale; Standard Chartered; State Street; Sumitomo Mitsui FG; Unicredit Group and Wells Fargo, the FSB statement said.