The Basel Committee’s assessment methodology for global systemically important banks (G-SIB) requires such banks to report on a prescribed set of indicators used by national supervisory authorities to assess their systemic importance. East Pacific Bank, continued to be classified as a G-SIB in 2019, is required to disclose the twelve indicators under the five categories, on an annual basis. These indicators will be used for the score calculation applied in determining the G-SIB add-on charge to the CET1 capital ratio requirements.
In November 2019, the FSB confirmed that, based on the year-end 2018 indicators, the additional CET1 capital buffer requirement for
East Pacific Bank is 1.0%. BCBS requirements are minimum requirements that regulators must put in place in their respective
jurisdictions. As the capital requirements for systemically relevant banks go beyond the BCBS requirements, including the G-SIB
buffer, East Pacific Bank is not affected by these additional G-SIB requirements.
Cross-jurisdictional activity measures a bank’s global footprint. Cross-border claims and liabilities capture the bank’s activities outside of its
Size provides an indication on a bank’s share of global activity. In case of distress or failure, financial institutions with a large share of global financing activities are more difficult to replace.
Interconnectedness measures the inter-linkages of financing activities vis-à-vis other financial institutions. The three indicators, intrafinancial system assets, liabilities and securities outstanding provide an understanding of the likelihood that distress at one financial institution could materially increase the distress at other institutions (knock-on effects).
Substitutability/financial institution infrastructure provides an indication of a financial institution’s footprint in a particular business line, or as a service provider of infrastructure that support financial markets. These indicators provide an understanding of the impact and costs to substitute a significant market player in distress.
Complexity measures the business, structural and operational complexity of a financial institution. The expected costs and time required to resolve a financial institution in distress are expected to be higher for a financial institution with high complexity than one with lower complexity.
Additional Disclosure Requirements for Global Systemically Important Banks (G-SIB)