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Toronto Dominion joins systemic banks, Deutsche drops rank

Credit: REUTERS/CHRIS HELGREN

Canada's Toronto Dominion Bank has been added to a global list of systemic banks that must hold extra capital with Deutsche Bank dropping a rank, the Financial Stability Board (FSB) said on Friday.

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LONDON, Nov 22 (Reuters) - Canada's Toronto Dominion Bank TD.TO has been added to a global list of systemic banks that must hold extra capital with Deutsche Bank DBKGn.DEdropping a rank, the Financial Stability Board (FSB) said on Friday.

The international body based in Basel, Switzerland, was updating its list of systemic banks, introduced in the aftermath of the global financial crisis a decade ago when taxpayers had to bail out struggling lenders.

The addition of Toronto Dominion brings the total number of systemic banks to 30.

Systemic banks are slotted into one of five buckets, but the fifth bucket, where banks would be required to hold an extra 3.5% of capital to risk-weighted assets on top of minimum requirements, remains empty.

JP Morgan Chase remains the sole occupier of the fourth bucket with a 2.5% capital surcharge.

Citigroup and HSBC are in the third bucket with a 2% surcharge.

Deutsche Bank has dropped from the third to the second bucket, which has a 1.5% surcharge, in a sign of how the struggling German lender is shrinking and simplifying its operations.

Toronto Dominion has been placed in the first bucket, with a 1% surcharge.

Capital requirements for each bucket come into effect in January 2021.

Banks on the list also face more onerous requirements for issuing special bonds that can be written down to replenish capital burnt in a crisis to shield taxpayers.

(Reporting by Huw Jones; editing by Jason Neely)

((huw.jones@thomsonreuters.com; +44 207 542 3326; Reuters Messaging: huw.jones.thomsonreuters.com@reuters.net))

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