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 fail.

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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