The Financial Stability Board has named four banks as the world's most systematically important financial institutions. By establishing Citigroup, Deutsche Bank, HSBC Holdings, and JPMorgan Chase as lynchpins of the global financial marketplace, the FSB set the stage for further increasing capital buffers intended to gird against unexpected market shocks.

The four banks are on track for additional “loss absorbency requirements," a 2.5 percent capital surcharge over the international Basel III Common Equity Tier 1 capital requirement for holding at least 7 percent of risk-weighted assets. Institutions are being sorted among "buckets corresponding to their required level of additional loss absorbency" by the consortium of international regulators..

Those expectations go beyond the requirements placed on 24 other institutions (among them Bank of America,  Morgan Stanley, Goldman Sachs, State Street and Wells Fargo) also designated as Global Systemically Important Banks (G-SIBs) last week. That broader pool of banks will be subject to an additional progressive Common Equity Tier 1 capital requirement that ranges from 1% to 2%. They must also meet greater expectations for risk management functions, data aggregation capabilities, risk governance, and internal controls.

G-SIB's will have the new requirements phased in from January 2016 to January 2019. G-SIBs designated in subsequent annual updates will need to meet these higher expectations within three years of the classification.

On Friday, the FSB launched a “public consultation” on guidance for recovery and resolution planning for Systematically Important Financial Institutions. The guidance will assist national authorities in implementing the requirements set out in the FSB's "Key Attributes of Effective Resolution Regimes for Financial Institutions." Among the matters covered:recovery triggers and stress scenarios to be used by firms in their planning; and the identification of critical functions and supporting services that would need to be maintained in a crisis for reasons of systemic stability.

The FSB is accepting comments and responses to the questions raised in the consultative document by Friday, Dec. 7. Responses, sent to fsb@bis.org, will be published unless respondents expressly request otherwise.

As for other financial institutions, the FSB, in consultation with the International Organization of Securities Commissions, will finalize an assessment methodology for identifying systemically important non-bank non-insurance financial institutions over the course of 2013. The International Association of Insurance Supervisors (IAIS) has also issued its proposed methodology for identifying global systemically important insurers (G-SIIs) for public consultation.