UPDATE 2-Regulators say four big banks must hold more capital

* Citigroup, Deutsche Bank, HSBC, JPMorgan Chase top list

* Must hold extra capital to absorb potential losses

* Other big banks assigned smaller buffers

* G20 finance ministers meet in Mexico this weekend

Nov 1 (Reuters) - Global regulators on Thursday said Citigroup Inc, Deutsche Bank, HSBC and JPMorgan Chase & Co will need to hold the most extra capital of 28 banks considered so large and complex they need an extra buffer to absorb potential losses.

The four global banks will be required to hold an extra 2.5 percent of common equity as a percentage of risk-weighted assets on top of a 7 percent minimum being phased in from January, according to the Financial Stability Board, a regulatory task force for the group of 20 top economies.

The additional cushion aims to make sure large banks cannot threaten the financial system in future crises and require government bailouts.

The FSB will update its requirements twice more over the next two years before they start going into effect in 2016.

Large banks are building capital to meet the new requirements known as ``Basel III.'' For banks, holding more capital - in other words, funding themselves with more equity - makes it harder to wring profit from their balance sheets. But higher capital levels also give banks a bigger cushion to absorb losses, making it harder for them to go broke in bad times.

Barclays Plc and BNP Paribas were assigned the next highest buffer of 2 percent, according to the FSB. Eight banks including Bank of America Corp and Goldman Sachs Group Inc fell in the next highest bucket of 1.5 percent.

The remaining 14 banks will be required to hold 1 percent of extra capital. No bank was in the 3.5 percent range, which is considered a stick to stop banks from growing any bigger.

Thursday's statement was timed for a meeting of G20 finance ministers in Mexico this weekend when governments will review progress in implementing a welter of pledges to reform finance after the 2007-2009 financial crisis.

The Financial Stability Board published an initial list of 29 so-called systemically important banks in November 2011, but Thursday's statement was the first time that it assigned specific capital buffers to each bank.

The FSB on Thursday reduced the list to 28 as it removed three institutions - Dexia, Commerzbank and Lloyds Banking Group - and added BBVA and Standard Chartered.

The capital requirements likely held some surprises for banks and their investors. For example, an industry source had told Reuters last year that a preliminary assessment showed Bank of America and Deutsche Bank would likely be in the 2 percent category. Bank of America ended up being lower and Deutsche Bank higher.

The additional requirements will begin to be applied in January 2016 and will be phased in by January 2019. The FSB's list will be updated in November 2013 and 2014.