Core Viewpoint - The Financial Stability Board (FSB) has released the 2025 Global Systemically Important Banks (G-SIBs) list, with five major Chinese banks included, and the Industrial and Commercial Bank of China (ICBC) has been upgraded from Group 2 to Group 3 [4][5]. Group 1: G-SIBs List and Rankings - Five major Chinese banks, including ICBC, Bank of China, China Construction Bank, Agricultural Bank of China, and Bank of Communications, are included in the 2025 G-SIBs list [5]. - ICBC's capital requirement has increased by 0.5 percentage points due to its upgrade to Group 3, raising its additional capital requirement from 1.5% to 2% [5]. - Other four major banks maintain their additional capital requirements at 1.5%, while Bank of Communications remains at 1% [5]. Group 2: Score Changes and Future Prospects - The scores of the five major banks have increased by 9 to 33 points, indicating a potential for Bank of China to be upgraded in the future [5]. - ICBC and Bank of China scored above 300 points, with ICBC's score rising by 33 points to 332 and Bank of China's by 32 points to 314, just 16 points away from the Group 3 threshold [5]. - Agricultural Bank of China and China Construction Bank scored 272 and 259 points respectively, with stable group expectations in the short term [5]. - Bank of Communications scored 138 points, an increase of 9 points, remaining in Group 1 [5]. Group 3: Potential for Other Banks - The likelihood of China Merchants Bank entering the G-SIBs list has significantly increased, with its score rising by 19 points to 122, just 8 points shy of Group 1 [6]. - Other banks such as Industrial Bank and CITIC Bank have maintained stable scores, while Shanghai Pudong Development Bank's score has remained unchanged [6]. Group 4: Capital Adequacy and Regulatory Compliance - After the upgrade, ICBC's core Tier 1 capital adequacy ratio requirement increases to 9.5%, while its actual ratio stands at 13.6%, providing a buffer of 4.1 percentage points [7]. - All major banks meet the G-SIBs regulatory requirements, with safety margins ranging from 0.8 to 5.4 percentage points [7]. - The total loss-absorbing capacity (TLAC) requirements are also being met, with ICBC's total capital adequacy ratio at 19%, exceeding the required thresholds [7].

Group 1: Core Insights - The 2025 Global Systemically Important Banks (G-SIBs) list has been released, with Chinese banks maintaining the same number of five institutions as the previous year, but with the Industrial and Commercial Bank of China (ICBC) moving up to the third group, becoming the first Chinese bank in this category [1][2] - The assessment framework for G-SIBs includes five weighted dimensions: size, interconnectedness, substitutability, complexity, and cross-border activity, with 13 secondary indicators used for a comprehensive evaluation [3] - Fitch Ratings noted that the scoring changes for Chinese G-SIBs this year are driven less by size and more by exchange rate effects, which have historically alleviated upward pressure on scores [3][4] Group 2: TLAC and Regulatory Requirements - Following the successful achievement of the first phase of Total Loss-Absorbing Capacity (TLAC) requirements, the pressure for the next phase remains a concern, with the issuance of TLAC non-capital bonds exceeding 300 billion yuan this year, totaling 540 billion yuan cumulatively [1][7] - The G-SIBs face higher core capital and TLAC regulatory requirements, with specific targets set for 2025 and 2028, including a TLAC risk-weighted ratio of at least 16% and 18% respectively [6][9] - As of Q1 2025, the four major banks have exceeded the minimum TLAC/RWA requirement of 20%, but the second phase compliance is still under scrutiny, with some banks needing additional capital to meet the requirements [7][9] Group 3: Market Dynamics and Future Outlook - The issuance of TLAC non-capital bonds has been a significant tool for G-SIBs to meet their total loss-absorbing capacity requirements, with the major banks having issued multiple tranches since last year [7][8] - Fitch Ratings anticipates that while some banks can meet the next phase of TLAC requirements, others may need government capital injections to alleviate pressure on their total loss-absorbing capacity [9] - The report indicates that if risk-weighted asset growth remains stable, the major banks are likely to meet the upcoming TLAC requirements on schedule [9]