TLAC
Total Loss-Absorbing Capacity
Definition
The FSB standard requiring global systemically important banks (G-SIBs) to maintain sufficient loss-absorbing and recapitalisation capacity to ensure that critical functions can continue during and after resolution without taxpayer bailout. TLAC instruments must be available for write-down or conversion to equity in resolution.
Regulatory Context
TLAC was developed by the FSB to address the too-big-to-fail problem. In the EU, the MREL requirement serves a similar purpose but applies to all banks, not just G-SIBs. TLAC is typically set at 18% of RWA plus buffers.