Asia banks seek Sifi status

Regulators have published their list of global systemically important financial institutions, and will now start to consider those institutions that pose a systemic risk to individual jurisdictions. The extra levels of capital that Sifis will need to hold will, regulators hope, act as a deterrent to banks from becoming too large. But some banks in Asia are thought to be actively seeking Sifi status in the belief that it will accord a degree of prestige on their business – and, with it, cheaper cost of funding

Badge of honour: some banks desire Sifi status

Regulators have been very clear: they want big, systemically important banks to become smaller and less complex. They want to eradicate the moral hazard that exists with banks that are deemed to be too big to fail – in other words, eliminate the implicit guarantee of government support for large banks. And they want those banks deemed to be systemically important to hold an additional capital surcharge, both to reduce the probability of failure and to act as an incentive to scale back.

Much of