JPMor­gan ranks no 1 as bank most cru­cial to fi­nan­cial sta­bil­ity

The Pak Banker - - COMPANIES/BOSS -

JPMor­gan Chase & Co. is the bank most in­te­gral to the sta­bil­ity of the global fi­nan­cial sys­tem, fol­lowed by HSBC Hold­ings Plc and Cit­i­group Inc., ac­cord­ing to a U.S. study. US-based banks ac­count for half of the 10 lenders that ranked high­est for "sys­temic im­por­tance" in the re­port re­leased Tues­day by the Of­fice of Fi­nan­cial Re­search. Bank of Amer­ica Corp., Mor­gan Stan­ley and Gold­man Sachs Group Inc. were also in the top 10.

The re­searchers eval­u­ated fac­tors that global reg­u­la­tors use to as­sess sys­temic im­por­tance, in­clud­ing size, com­plex­ity and how dif­fi­cult the bank would be to re­place if it were to fail. U.S. banks "par­tic­u­larly dom­i­nate the com­plex­ity and sub­sti­tutabil­ity cat­e­gories," ac­cord­ing to the re­port, writ­ten by the OFR's Paul Glasser­man and Bert Loudis. Banks based out­side of the US that were in the top 10 in­clude Deutsche Bank AG, BNP Paribas SA, Bar­clays Plc and Credit Suisse Group.

The re­port said ex­change-rate fluc­tu­a­tions could im­pact the rank­ings, and is a po­ten­tial weak­ness in the cri­te­ria used by the Basel Com­mit­tee on Bank­ing Su­per­vi­sion, a group of in­ter­na­tional reg­u­la­tors. Banks might be en­cour­aged to "ad­just their busi­ness near the end of the year solely to off­set cur­rency ef­fects," the re­searchers said. JPMor­gan was also first in a rank­ing of just U.S. banks that the re­search of­fice re­leased in Fe­bru­ary. The OFR con­ducts stud­ies for U.S. reg­u­la­tors and the Fi­nan­cial Sta­bil­ity Over­sight Coun­cil. JPMor­gan, the big­gest US bank by as­sets, has a short­fall of as much as $12.5 bil­lion to meet cap­i­tal rules ap­proved by the Fed­eral Re­serve last month. The New York-based len­der was as­signed the high­est cap­i­tal sur­charge of the eight large U.S. banks that must com­ply with the new Fed rule.

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