ANKARA (Reuters) - A group of financial stability experts has proposed to G20 finance ministers and central bankers a two-stage approach for introducing Total Loss Absorption Capacity (TLAC) buffers for big banks, a G20 source told Reuters on Friday.
The proposal to the Group of 20 leading economies would see the introduction of a buffer of 16 percent of a bank’s risk-weighted assets from 2019 and 20 percent from 2022, the source said.
The United States had pushed for 20 percent, where as some in Europe had been arguing for 16 percent on the grounds that their banks were still recapitalising after the financial crisis.
The buffer is a new layer of debt the world’s biggest banks like Goldman Sachs (GS.N) and Deutsche Bank AG DBGKn.DE must issue to write down in a crisis and bolster their capital situation.
Reporting by Gernot Heller; Writing by Nick Tattersall; Editing by Randall Palmer