Regulators end ‘too big to fail’ culture of 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 (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 deemed to be “globally systemic” such as Goldman Sachs, Deutsche Bank, and HSBC.