U.S. Large-Cap Banks: 1Q26 GSIB Surcharge Tracker: Scores continue to climb but changes coming

Research evidence excerpt

U.S. Large-Cap Banks: 1Q26 GSIB Surcharge Tracker: Scores continue to climb but changes coming

Barclays | U.S. Large-Cap Banks

Overview

The Dodd-Frank Act required the Fed to adopt enhanced capital standards for the largest,

global systemically important banks (GSIBs) in the United States, to mitigate the risks

posed to financial stability. The eight U.S. banks deemed to be GSIBs include BAC, BNY, C, GS,

JPM, MS, STT and WFC. The GSIB capital surcharge is an additional capital buffer that U.S. GSIBs

need to hold over and above the capital buffer that applies to non-GSIBs. The buffer applies to

all risk-based minimum capital requirements (common equity tier 1, tier 1, and total).

The large banks’ common equity tier 1 (CET1) capital ratio requirement is made up of

several components. It is the sum of a minimum CET1 capital ratio requirement of 4.5% (same

for every bank), the stress capital buffer (SCB) requirement (determined from the supervisory

stress test results and is at least 2.5%), a countercyclical capital buffer (initially set at zero and

has not been increased since its inception, but can be as high as 2.5%), and a GSIB capital

surcharge for certain banks. These banks are required to calculate the GSIB surcharge

annually according to two methods and be bound by the higher of the two.

Method 1 is consistent with the approach prescribed by the Basel Committee’s assessment

methodology and is calculated using five equally weighted components of systemic

importance. It considers size, interconnectedness, cross-jurisdictional activity, substitutability,

and complexity. Method 2 modifies the Method 1 approach. It uses similar inputs, but

replaces substitutability with quantitative measure intended to assess a GSIB’s reliance on

short-term wholesale funding.