Central bankers and regulators have agreed to impose an extra capital charge of 1 per cent to 2.5 per cent of risk-adjusted assets on the largest banks in a bid to protect them from the big losses that could trigger another financial meltdown.
The surcharge comes on top of the worldwide Basel III minimum of 7 per cent set last year for all banks. That means roughly eight of the biggest, most interconnected banks have to maintain top quality “core tier one capital” equal to 9.5 per cent of their risk-weighted assets by 2019. About 20 more banks will face total ratios of 8 to 9 per cent.
The overseers of the Basel Committee on Banking Supervision also said they reserved the right to impose a further surcharge of 1 per cent – for a total of 10.5 per cent – on the top banks if they become even larger or more important to the banking system.