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The logo of the Royal Bank of Canada (RBC) is seen on a building in Toronto June 11, 2015.Chris Helgren/Reuters

The Financial Stability Board has updated its list of global systemically important banks (G-SIB), passing over Royal Bank of Canada at a time when its capital levels are already under pressure.

RBC had been viewed as a strong candidate for the list of banks that are deemed big enough to trigger a financial crisis, or too big to fail. Avoiding the list means that the lender will not have to add an additional capital buffer, starting at 1 per cent, to satisfy the regulatory demands of the FSB, an international body that monitors and makes recommendations about the global financial system.

This should come as a relief: RBC is now trying to rebuild its capital levels following the close of its $5-billion (U.S.) takeover of City National Corp., the biggest deal in the bank's history. The acquisition is expected to lower RBC's common equity Tier 1 ratio – a measure of financial strength watched by domestic regulators – by 70 basis points or 0.7 percentage points from a recent level of 10.1 per cent.

"Not being included as a G-SIB provides the bank more flexibility in rebuilding capital," Robert Sedran, an analyst at CIBC World Markets, said in a research note. "We expect that given its strong profitability it can add roughly 15 to 20 basis points per quarter."

But the impact of the FSB's decision resonates well beyond RBC, and potentially affects all of the Big Six.

David Beattie, the senior vice-president of the financial institutions group at Moody's Investors Service, pointed out on Tuesday that the Office of the Superintendent of Financial Institutions, a national regulator, would likely treat all banks equally if one of them had to raise its capital buffers.

"We think OSFI would be very reluctant to have a two-tier capital requirement for Canadian banks, so if one of the Canadian banks tips onto [the list of global systemically important financial institutions], probably all of the Canadian banks would be pressured to improve their capital holdings," Mr. Beattie said during a discussion with reporters.

Still, the FSB draws up its G-SIB list each November, raising the possibility that RBC could be included in a future version. For 2016, though, that appears unlikely.

Mr. Sedran noted that the FSB's methodology for inclusion on the list includes a translation of a bank's balance sheet into euros, which works in RBC's favour right now: "Since December 31, 2014, the euro has appreciated versus the Canadian dollar while depreciating against the U.S. dollar," he said in his note. "This gives Royal Bank a relative benefit, as the translation will be favourable to the size of its balance sheet versus its European and U.S. peers and gives it time to contemplate evasive action to stay off the list even longer."

Then again, changes within Canada could push capital levels higher anyway: Ottawa is considering new "bail-in" rules that would force bondholders and shareholders to absorb losses during a failure, rather than relying on taxpayers for a bailout.

According to Peter Routledge, an analyst at National Bank Financial, capital ratios for the Big Six could be headed toward 11 per cent if the new rules are adopted.