A collapse of one of the UK’s major banks would not require a taxpayer bailout, according to a new assessment by the Bank of England.
The report says that the institutions have continued to make progress in improving their preparations for ‘resolution’.
The Bank of England’s second assessment under the Resolvability Assessment Framework (RAF) examined Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest Group, Santander UK, Standard Chartered and Virgin Money UK.
It found that if any of these eight banks were to fail today it could enter resolution safely: remaining open and continuing to provide banking services, with shareholders and investors — not public funds — first in line to bear the costs of failure.
Although some issues were identified, none are likely to impede the Bank of England’s ability to execute a resolution. The banks are expected to address the feedback from this assessment, and continuously maintain and improve their resolvability capabilities.
“We welcome the progress made by the major UK banks,” said Dave Ramsden, Deputy Governor for Markets, Banking, Payments and Resolution.
“Maintaining a credible and effective resolution regime is a continuous process, and authorities and firms need to respond as the financial system and regulatory landscape evolves. Resolvability will never be ‘done’ and there will always be lessons to learn from putting the regime into practice.”
