trending Market Intelligence /marketintelligence/en/news-insights/trending/NNHv6gxyzWdce97B9rjntg2 content esgSubNav
In This List

JPMorgan maintains world's largest systemic risk footprint


Banking Essentials Newsletter: 7th February Edition

Case Study

A Bank Outsources Data Gathering to Meet Basel III Regulations


Private Markets 360° | Episode 8: Powering the Global Private Markets (with Adam Kansler of S&P Global Market Intelligence)


Banks’ Response to Rising Rates & Liquidity Concerns

JPMorgan maintains world's largest systemic risk footprint

JPMorgan Chase & Co. continues to boast the world's largest systemic risk footprint.

The Financial Stability Board, a group of international regulators, publishes an annual ranking of banks by systemic risk footprint. Banks with the highest scores are labeled as global systemically important banks, or G-SIBs, a designation that generally requires higher capital ratios.

While JPMorgan is not the world's largest bank, its dominance in various business lines has firmly entrenched it with the largest systemic risk footprint. For 2017 year-end data, used for the latest G-SIB ranking released on Nov. 16, JPMorgan's size measured €2.71 trillion, significantly lower than Industrial & Commercial Bank of China Ltd., which posted €3.60 trillion of total exposures.

The Financial Stability Board includes off-balance sheet items in the total exposures measure of size, so the data differ substantially from the data U.S. banks report under generally accepted accounting principles.

However, JPMorgan's figures were substantially larger than the Chinese bank on various other business lines, such as over-the-counter derivatives, which figure prominently in the calculation for a bank's complexity. JPMorgan's €37.30 trillion of such derivatives compared to Industrial & Commercial's €717.6 billion.

JPMorgan management has previously said the bank strives to avoid being an "outlier" on the G-SIB score, and the bank has worked to lower its score. The bank's score has declined by 26 basis points over the last year and is now just 11 basis points within the cut-off threshold to move down a "bucket," according to an S&P Global Market Intelligence analysis using the formulas stipulated by regulators.

Each bucket carries a specific surcharge that the international regulators recommend local supervisors place on top of a bank's minimum capital ratios. Therefore, if JPMorgan were able to drop a bucket, it would conceivably face the same surcharge as Citigroup Inc. Other banks in that bucket, HSBC Holdings PLC and Deutsche Bank AG, would still face different minimum capital ratios since U.S. regulators have "gold-plated" the international recommendations.

SNL Image

SNL Image

Click here to view a template showing all components of the systemic risk scores for the 29 G-SIBs.

Click here to set-up real-time alerts for data-driven articles on any region of interest.