Global systemically important banks

The failure of a global systemically important bank would have a significant impact on the global economy. These banks are large, complex, and interconnected with other banks around the world. As a result, they have more supervisory requirements.

How global systemically important banks are identified

To identify these banks, the Basel Committee on Banking Supervision uses 12 indicators in 5 categories:

  • Size – how big is its share of banking activity
  • Substitutability – how easily can it be replaced as a market participant and financial service provider
  • Interconnectedness – how connected is it to other financial institutions
  • Complexity – how many different services does it offer
  • Cross-jurisdictional activity – how much activity does it undertake in other financial jurisdictions

Canada’s global systemically important banks

Canada has two global systemically important banks:

  • Royal Bank of Canada
  • Toronto-Dominion Bank

These banks are also included in the list of Canada’s domestic systemically important banks.

Due to the potential global impact if they fail, these two banks have stricter requirements than others, including: 

  • capital absorbency
  • disclosure
  • supervisory expectations

This higher level of supervision helps to ensure that these banks remain sound and healthy to protect the global financial system.