The world's largest banks will have to build up their loss-absorbing liability buffers to see them through a crisis, as regulators tackle too-big-to-fail lenders six years after the collapse of Lehman Brothers Holdings Inc.

The Financial Stability Board (FSB), led by Bank of England Governor Mark Carney, said today that the biggest banks may be required to have total loss-absorbing capacity equivalent to as much as a quarter of their assets weighted for risk, with national regulators able to impose still tougher standards. The FSB is seeking comment on the rule, known as TLAC, which would apply at the earliest in 2019.

The plans are a “watershed” in regulators' mission to end the threat posed by banks whose size and systemic importance mean their failure would be catastrophic for the global economy, Carney told reporters today in Basel, Switzerland. “The outlines of how we are going to end too-big-to-fail are here.”