Bank of England: ‘British banks no longer’ big enough to fail ‘

The UK Federal Reserve is pleased with the steps taken by lenders in the country to ensure that they are no longer “on the verge of failure” in the event of a future crisis. Nevertheless, the financial institution has identified shortcomings in three more major banks.

Why is this important?

Banks large enough to “fall” by the government, that is, not allowed to go bankrupt, “have failed so big.” After all, bankruptcy can have many consequences for the proper functioning of the financial system. This applies primarily to large consumer banks; If such a company collapses, many savers will lose their savings.

Nearly 14 years after the financial crisis that led to the collapse of the banking system and triggered massive taxpayer bailouts, the Bank of India (BoE) has released its first assessment of how lenders are coping with such a crisis. General

The central bank has found that even if a large UK lender fails, customers can still access their accounts and banks can usually provide their services on a regular basis. That includes the message Defender

Another finding is that shareholders and investors – not taxpayers – will first offset the banks’ losses and ensure they have sufficient capital to operate.

Disadvantages

However, the BoE warned that some major banks “needed further reforms” to avert the chaos of the 2008 financial crisis, forcing the British government to pay £ 137 billion (about 160 160 billion) in taxpayers’ money. Confirm the banking system. For comparison: for us, the rescue operation of BNP, KBC, Belfius, Dexia and Ethias About 28 billion eurosToday it is 5 percent of GDP.

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The UK Federal Reserve has said that three lenders, HSBC, Lloyds and Standard Chartered, need to address shortcomings that “unnecessarily complicate the possibility of safe bankruptcy”. None of the three lenders appeared to have sufficient financial resources or relevant data to confirm that they could absorb the loss without relying on public funds.

Concerns were also raised as to whether HSBC could formally restructure the company to ensure that services are provided when the authorities assist in terminating the lender. It was also advised that Standard Chartered Bank had not been notified of all existing restructuring options.

Lenders have until 2024 – when the next appraisal takes place – to address the shortcomings. Other lenders involved in the review include Barclays, Knotwest, Nationwide, Santander UK and Virgin Money UK.

“Complex Challenge”

“Protecting a large bank will always be a complex challenge, so it is important that we and the major banks continue to prioritize work on this issue,” said Dave Ramston, the United Nations Deputy Governor for Markets and Banks.

The BoE has the power to make lenders structural changes if it believes there are barriers to closing quickly and properly.

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Ferdinand Woolridge

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