After a broad consultation paper released June, the BCBS has released its framework for addressing domestic systemically important banks or “D-SIBs.” This is on schedule for delivery and discussion at the upcoming G20 meeting, and should seen as related to and coordinated with the pre-existing G-SIFI framework.
The framework is quite loose, giving considerable discretion to national regulators to determine which banks are D-SIBs through their own methodologies. Base assessment criteria is largely similar to that of G-SIFIs, covering size, interconnectedness, substitutability and complexity, so there are no real surprises here. National regulators are also expected to determine higher loss absorbencies for these banks in line with their importance.
What is surprising in this framework is the implementation date: 2016. This is the exact same time frame as for G-SIFIs, which means national regulators (and D-SIBs) will need to hit the ground running to comply in time for this ambitious deadline. With so much flexibility, and the potential for even G-SIB standards to shift or be updated at November’s G20, D-SIBs may face an uncertain road ahead to 2016 and beyond.