BOE Vows to End Too Big to Fail With New Bank Resolution Rule

(Bloomberg) -- The Bank of England ordered the U.K.’s biggest banks to produce public reports about how they could avoid a messy failure in a crisis and without a taxpayer bailout.

The BOE on Tuesday said that the country’s biggest lenders must produce the reports by October 2020, summaries of which will be made public in June the following year.

The rules apply to banks with at least 50 billion pounds ($60 billion) of retail deposits such as Barclays Plc and HSBC Holdings Plc. After promising Parliament that all banks would be resolvable by 2022, the central bank said it hoped public scrutiny would help put an end to the notion that some institutions are too big to fail.

“Increased transparency about the resolution regime is in the public’s interest and also incentivises firms to make further progress on their resolvability,” said BOE Deputy Governor Jon Cunliffe.

Tuesday’s announcement is billed as the last major regulatory policy towards reaching that goal.

Under the policy, each bank must produce a report, possibly 250-pages long, showing how vital services such as lending and deposit-taking can continue when the firm is failing. The resolution rules are designed to give authorities or new management the time they need to restructure the firm or wind it down.

While the BOE won’t give pass or fail marks to each bank, it intends to assess the plans and will comment publicly about them. The BOE said the policy won’t change if the U.K. leaves the European Union without a withdrawal agreement in place on Oct. 31.

To contact the reporter on this story: Silla Brush in London at sbrush@bloomberg.net

To contact the editors responsible for this story: Ambereen Choudhury at achoudhury@bloomberg.net, Brian Swint

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