Capital
G-SIB Surcharge
The G-SIB Surcharge is an additional CET1 capital requirement applied to Global Systemically Important Banks (G-SIBs). The eight US G-SIBs face surcharges ranging from 1.0% to 4.5% on top of the standard capital framework.
How is G-SIB Surcharge calculated?
The Federal Reserve assigns each G-SIB a score based on size, interconnectedness, substitutability, complexity, and cross-jurisdictional activity. Higher scores produce higher surcharges. Method 2 (using a substitute reliance-on-short-term-wholesale-funding indicator) is generally the binding calculation for US G-SIBs.
Why does G-SIB Surcharge matter?
The surcharge is the regulatory premium for being 'too big to fail.' JPMorgan Chase, the largest US G-SIB, faces a 4.5% surcharge. Its total CET1 requirement is 11.5% with its stress capital buffer at the 2.5% floor. The surcharge is a direct counterweight to the implicit funding subsidy that comes from being a G-SIB.
How do you interpret G-SIB Surcharge?
G-SIB surcharges are republished annually by the Federal Reserve. Movement between buckets is rare but newsworthy. The total effective CET1 floor for a US G-SIB is the 7% (4.5% min + 2.5% CCB) baseline plus the surcharge, 8.0-11.5% when the stress capital buffer is at its 2.5% floor.
What is a good G-SIB Surcharge?
| Range | Label | Interpretation |
|---|---|---|
| 0% | Non-G-SIB | Standard capital framework only. |
| 1.0–2.0% | Lower tier | State Street (1.0%), BNY and Wells Fargo (1.5%). |
| 2.5–3.5% | Middle tier | Bank of America and Morgan Stanley (3.0%), Citigroup and Goldman Sachs (3.5%). |
| 4.0–4.5% | Highest tier | JPMorgan Chase (4.5%). |
Worked example
Frequently asked
Which US banks are G-SIBs?
Eight: JPMorgan Chase, Bank of America, Citigroup, Wells Fargo, Goldman Sachs, Morgan Stanley, Bank of New York Mellon, and State Street.
Why is JPM's surcharge higher than the others?
JPMorgan scores highest across most of the five systemic-importance indicators (size, complexity, interconnectedness, etc.), placing it in the highest US bucket.
Does the G-SIB surcharge change over time?
Yes. The Federal Reserve publishes scores annually and a G-SIB can move between buckets as its size and complexity shift. A July 2023 proposal to recalibrate the calculation was replaced by a re-proposal in March 2026, with comments due June 18, 2026; check the Federal Reserve's site for its final status.
Sources
- 12 CFR §217.403-406: G-SIB surcharge, method 1 and method 2 scores, and short-term wholesale funding score
- Annual Federal Reserve G-SIB surcharge publication
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