In the continued strive to secure stronger financial stability; global banking regulators are still working on new regulations to make the world's biggest banks safer by 2019 to prevent another disaster like the financial crisis.
After a meeting in Brussels on Saturday, the Group if Governors and Heads of Supervision (GHOS) agreed on an extra capital charge on the world's biggest banks, as this surcharge is part of a series of reforms to strengthen the banking sector and prevent systemic collapse.
The group said in a statement the additional loss absorbency requirements are to be met with progressive common equity tier 1 capital requirement ranging from 1 percent to 2.5 percent, depending on a bank's systemic importance. Also banks that are deemed to have become significantly bigger will endure another 1.0% pushing the total to 3.5%.
This proposal would be put out for public consultation next month and still pending the approval of the G20 leaders in November and the plans will likely be phased between January 2016 and the end of 2018.
This surcharge is the latest in the reform to the banking system to ensure global financial stability. The Basel III accords already introduced a new 7% minimum core capital on all banks worldwide that will be phased over six years starting 2013.