Japan clarifies TLAC risk weightings

摘要

Japan's love affair with loss-absorbing senior bank debt is set to continue into the 2019 fiscal year after the country's banking regulator clarified its approach to risk weightings from April 1. The Financial Services Agency has published final rules on local holdings of bonds counting towards total loss-absorbing capacity (TLAC) requirements, following up on guidance released last April. The latest notice clarified that domestic banks with no overseas branches - mainly regional investors - would only face additional risk weightings on holdings of TLAC instruments from global systemically important banks (G-SIBs). The higher capital requirements would apply only after new investments exceed 5% of a domestic bank's core capital.