Spain’s BBVA off systemically important banks list

The Financial Stability Board (FSB), which coordinates global financial regulation, announced yesterday that it has removed BBVA from its list of global systemically important banks. Spain’s second biggest bank has been included in this list of 30 banks since 2012.

The banks on the FSB’s list have to face additional capital charges because of the risk to the global financial system inherent in their size. The fact that BBVA is now off this list implies it is no longer subject to the capital buffer requirements for these banks. Nor does it have to comply with the proposed regulation regarding Total Loss-absorbing Capacity (TLAC), which could raise the total minimum capital ratio to 16% of a bank’s consolidated risk-weighted assets.

BBVA’s removal from the FSB list will be beneficial for the lender, according to analysts at ACF, as “it won’t need the additional capital cushion the global systemically important banks are required to have.”

Nevertheless, BBVA has announced that it plans to reach the capital levels included in the TLAC regulation, given that it has been preparing to meet these requirements since the start of the year.
And although it has been taken off the list, BBVA will continue to be subject to other requirements related to loss-absorbing capacity, such as Minimum Requirement for Own Funds and Eligible Liabilities (MREL).