The Financial Stability Board (FSB) did not name the banks in its consultation paper on the new surcharge, which it confirmed in a news briefing on Monday would be set at between 1 and 2.5 percent.

The capital surcharge, which must be in the form of common equity, will have to be approved by world leaders (G20) at a summit in November to become fully effective by the end of 2018.

The G20 has pledged taxpayers won’t have to step in again to rescue banks in the next crisis and the FSB’s capital surcharge — along with separate plans on winding up big lenders in trouble in an orderly way — are aimed at meeting this objective to deal with “too big to fail” banks.

Although only banks will be affected first, other types of financial firms are set to face a tougher regime later on.

“The FSB, in co-operation with the international standard setting bodies, will carry out further work to address global systemically important insurers, domestic systemically important banks, other systemic financial firms and financial market infrastructure,” the FSB said. 

The size of the surcharge will depend on a calculation that weighs up five factors equally: size, cross-border activity, interconnectedness, complexity and substitutability.

The surcharge is on top of the 7 percent minimum the G20 has agreed should be phased in for all banks from 2013.

Banks such as Goldman Sachs, HSBC, Morgan Stanley and Deutsche Bank will almost certainly be among the surcharged lenders.

The FSB said the resulting score would then determine which of four equal buckets a bank would be slotted into to fix the surcharge at 1 percent, 1.5 percent, 2 percent or 2.5 percent.

An FSB chart foresees four banks in the top bucket and three in the one below.

An initially empty 3.5 percent bucket has also been created as disincentive for banks to get significantly bigger.

The scoring system was thrashed out by the Basel Committee on Banking Supervision on behalf of the FSB.

“Based on the results of applying the methodology, the Basel Committee is of the view that the number of globally systemically important banks (G-SIBs) will initially be 28, including one bank that has been added based on supervisory judgement applied by the home supervisor,” the FSB consultation paper said.

“It should be noted that this number would evolve over time as banks change their behavior in response to the incentives of the G-SIB framework,” the FSB added.

The 28 banks that will face a surcharge are part of a wider sample of 73 large banks that will also be under review as banks pass in and out of the overall surcharge band.

Banks with a surcharge will be reviewed annually to check their scores but in areas such as the European Union, when structural changes are made to a bank’s regional arrangements the score will be reviewed as actual changes are made.

Failure to meet surcharge requirements would require the bank to agree with its supervisor on a capital-boosting plan and, until that plan was implemented, there would be curbs on dividends. 

A bank will have a year to comply if it has to shift up to the next bucket or face the same penalties.

The FSB estimated a 1 percentage point increase in capital at the big banks will dampen economic growth by 0.17 to 3.17 basis point per year over a four-year implementation period.

It wants the surcharge implemented between January 2016 and the end of 2018. The initial set of G-SIB scores would be fixed no later than January 2014 and national jurisdictions will put the rules into law by January 2015, the FSB said.

The FSB also published a consultation paper on effective resolution of large banks which proposes a range of tools that national supervisors in G20 countries must have to wind up large complex banks in a way that avoids the kind of damaging fallout seen with the collapse of US bank Lehman Brothers in 2008.

Many of the suggested tools, such as “living wills” or resolution plans, have been well aired and are being implemented in some countries. It is proposed to have cross-border co-operation agreements among supervisors by the end of 2012.

The FSB says there should be powers to “bail in” a bank by writing off up to all the subordinated or senior unsecured creditor claims, but they should respect rights of secured creditors and statutory ranking of senior bondholders that would apply in a liquidation.

The FSB is still seeking common ground on whether or not the differing national rules on “creditor hierarchy” or the order in which shareholders and debt holders take a hit when a bank is in trouble, should be converged. These national differences make it much harder to wind up a cross-border bank.

Another area where the FSB is seeking consensus is on when early termination of financial contracts at a troubled bank can be suspended briefly to avoid a disorderly “rush for the exits.”