Regulators name JPMorgan as the most important bank for the global financial system

JPMorgan was once again named the world’s leading bank for the health of the financial system, based on the latest annual ranking of top lenders issued by international regulators.

The Financial Stability Board (FSB), made up of regulators from the G20 group of economies, published its latest table of the 30 most systemically relevant banks in the world.

The 30 lenders are divided into four “groups”In order of how systemic, international, interconnected and complex they are, and JPMorgan Chase and Co. ranked higher than its closest peers.

Last year, the US bank, which was also the world’s most systemically important lender in 2019, shared the highest segment with HSBC and Citigroup, but is now only in the next segment, which had been empty.

BNP Paribas and Goldman Sachs also rose in the rankings on systemic relevance, both up one tranche.

Being included in the implies means having to hold additional capital and undergo more intense supervision to avoid a repeat of the taxpayer bailouts that happened during the global banking crisis more than a decade ago.

In practice, lenders often have capital reserves that already exceed the FSB requirements.

JPMorgan had a core capital ratio of 12.9% equity to risk-weighted assets at the end of September, well above the 11.3% low set by the US Federal Reserve (Fed), according to a bank document.

The FSB capital surcharge for JPMorgan is now 2.5%, up from 2% last year.

US banks have fought aggressively, if unsuccessfully, against the FSB capital surcharges, but they are unlikely to make much progress under Democratic President Joe Biden.

However, the FSB raised the prospect of easing for euro zone banks on how their exposures to other nations in the bloc are calculated.

Euro zone lenders argue that they are regulated by the European Central Bank (ECB) within the framework of the EU banking union and therefore their exposures to other euro zone countries should not be considered “cross-border”, Which results in a stricter treatment.

The FSB said the Basel Committee, which writes global bank capital rules, will conduct a short-term review of cross-border exposures within the banking union against its list of most systemic lenders.