The Financial Stability Board removed Italy’s UniCredit the list of global systemically important banks.
The Financial Stability Board (FSB) has announced a significant shake-up in its annual ranking of global systemically important banks, with Italy’s UniCredit removed from the prestigious list.
The move comes as part of the FSB’s ongoing efforts to assess and monitor the stability of the world’s largest financial institutions in the aftermath of the global financial crisis.
UniCredit’s Delisted from Global Systemically Important Banks
For clarity, Global Systemically Important Banks (G-Sibs) are determined based on factors such as a bank’s size, level of interconnectedness, and complexity, with additional requirements including higher capital buffers and supervisory expectations. Banks that attain the status of being systemically important are subject to heightened regulatory requirements, encompassing higher capital buffers and more stringent supervisory expectations.
UniCredit, the sole Italian representative on the list of globally significant banks, was added to the list as a globally systemically important company in December last year. However, in its latest evaluation, the FSB deemed it fit to no longer classify UniCredit as systemically important.
The adjustment in the global bank rankings also saw the removal of Credit Suisse, a Swiss financial giant, from the list of systemically important banks. The FSB cited the recent takeover of Credit Suisse by Switzerland’s UBS (UBSG.S) as a contributing factor to its decision. The merger marked the first-ever consolidation of two systemically important banks, leading to UBS moving up a bucket in the FSB’s rankings.
“One bank (Bank of Communications (BoCom)) has been added to the list of G-SIBs that were identified in 2022, and two banks (Credit Suisse and UniCredit) have been removed. The overall number of G-SIBs, therefore, decreases from 30 to 29,” said FSB.
Despite the bank’s removal from the prestigious list, the country’s central bank, the Bank of Italy, has opted to exercise supervisory judgment, intending to continue identifying UniCredit as a Global Systemically Important Institution (G-SII) in 2024. The bank will be allocated to the first subcategory of global systemic importance.
According to the previous year’s classification, UniCredit is mandated to maintain, from January 1, 2023, a capital buffer for G-SIIs – measured in terms of best quality capital (Common Equity Tier 1, CET1) – equivalent to 1.0 percent of its total risk exposure. The buffer requirement will persist from January 1, 2024, onward.
Two Chinese Banks Enter the Prestigious FSB List
In a parallel move, China’s Bank of Communications (601328. SS) made its debut on the list of global systemically important banks, bringing the total number of banks down from 30 in the previous year to 29. Another Chinese bank, the Agricultural Bank of China, made it to the prestigious list.
The inclusion of these two Chinese banks underscores the evolving dynamics of the global financial landscape, with emerging market institutions gaining recognition on the international stage.