(Bloomberg) -- The U.K.'s biggest banks will have to showinvestors their plans to avoid a disorderly failure in a crisis,as part of regulators' plans to ensure no firm is too big tofail.
The Bank of England proposed requiring lenders with retaildeposits of at least 50 billion pounds such as Barclays Plc tosubmit reports on their preparations for a controlled collapseand to publish summaries of the reports.
“Disorderly bank failures can imperil financial stability,including by interrupting the most important services banksprovide to their customers,” BOE Deputy Governor Jon Cunliffesaid on Tuesday.
The BOE's goal is to ensure that by 2022, banks are “fullyresolvable,” meaning they can fail without disrupting theeconomy or relying on taxpayers to bail them out. The resolutionrules are designed to allow vital services such as lending anddeposit-taking to continue after a bank fails, so authorities ornew management have the time they need to restructure the firmor wind it down.
Under the proposal from the BOE's Prudential RegulationAuthority, big banks would submit assessments of theirresolution planning every two years starting in 2020, withpublic disclosure from 2021. Smaller banks and U.K. units ofinternational lenders will be monitored, and could face similardisclosure requirements in the future.
The PRA said preparing for resolution should be a key focus forbanks' top managers and board members. It will issue proposalsin the next few months on incorporating this responsibility intoits rules for senior managers.
©2018 Bloomberg L.P.
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