FSB's rule is no deterrence for a bank wanting to become, globally, the most systemically important bank.

Sir, Tom Braithwaite reports “China’s ICBC joins banking risk list”, November 12. It should have been expected, as surely the Chinese government must have complained about not having one bank in the exclusive list of Global Systemically Important Banks.

Also in reference to JP Morgan Chase and HSBC, Braithwaite categorizes the 9.5 percent of capital based on risk-weighted assets as “punitive” and mentions the current empty10.5 percent capital bucket as “a deterrent to any banks that may think of getting bigger or engaging in riskier activities”. He is wrong.

First, as we all should now 9.5 percent or 10.5 percent of capital does not really mean anything if the risk-weights do not mean anything. And second… would a bank stop trying to be the globally most systemically important bank, just because of a risk-weighted capital requirement?

Forget it! If FSB really want to see some serious containment of the too big to fail they should require 9.5 percent of capital on all assets. Frankly the naiveté of FSB trying to frighten the banks with such a feeble bogeyman is just mindboggling.

PS. By the way the list just published is based on 2012 year end data. Does that sound speedy enough?