U.K. Banks Told to Get Crisis-Ready as BOE Seeks to End Bailouts
(Bloomberg) -- The U.K.'s biggest banks will have to show
investors their plans to avoid a disorderly failure in a crisis,
as part of regulators' plans to ensure no firm is too big to
The Bank of England proposed requiring lenders with retail
deposits of at least 50 billion pounds such as Barclays Plc to
submit reports on their preparations for a controlled collapse
and to publish summaries of the reports.
“Disorderly bank failures can imperil financial stability,
including by interrupting the most important services banks
provide to their customers,” BOE Deputy Governor Jon Cunliffe
said on Tuesday.
The BOE's goal is to ensure that by 2022, banks are “fully
resolvable,” meaning they can fail without disrupting the
economy or relying on taxpayers to bail them out. The resolution
rules are designed to allow vital services such as lending and
deposit-taking to continue after a bank fails, so authorities or
new management have the time they need to restructure the firm
or wind it down.
Under the proposal from the BOE's Prudential Regulation
Authority, big banks would submit assessments of their
resolution planning every two years starting in 2020, with
public disclosure from 2021. Smaller banks and U.K. units of
international lenders will be monitored, and could face similar
disclosure requirements in the future.
The PRA said preparing for resolution should be a key focus for
banks' top managers and board members. It will issue proposals
in the next few months on incorporating this responsibility into
its rules for senior managers.
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