Global regulators reach agreement on bail-in bonds plan for top banks

Global regulators have reached a draft agreement on a rule on stopping banks from being “too big to fail” by requiring them to hold enough equity capital and bonds to avoid taxpayers being called on in a crisis.

The proposed standard is known as total loss absorbency capacity or TLAC and Bank of England governor Mark Carney — who chairs the global regulatory Financial Services Board (FSB) — has described it as the last major reform after the 2007-09 financial crisis forced governments to shore up lenders.

The rule will apply to nearly all the 30 big banks that the FSB has deemed to be “globally systemic” such as Goldman Sachs (>> Goldman Sachs Group Inc), Deutsche Bank (>> Deutsche Bank AG) and HSBC (>> HSBC Holdings plc).

“At today’s meeting FSB members discussed the TLAC impact assessments, and agreed the draft final principles and the updated term sheet,” the FSB said in a statement late on Friday.

Read on.

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