BoE Gives Cautious Thumbs Up to Major UK Banks’ Crisis Readiness
The Bank of England (BoE) has conducted its second “resolvability” assessment of Britain’s eight largest banks, concluding that these institutions could be safely wound down in a crisis without immediate need for taxpayer funds.
This evaluation, announced on Tuesday, is a crucial measure implemented following lessons learned from the 2007-09 global financial crisis.
The assessment covered major banks including HSBC (LON: HSBA), Barclays (LON: BARC), Lloyds (LON: LLOY), NatWest (LON: NWG), Santander UK (LON: BNC), Standard Chartered (LON: STAN), Virgin Money UK (LON: VMUK), and Nationwide. While some “shortcomings” and areas for “further enhancement” were identified, none were deemed severe enough to impede the resolution process in a crisis scenario.
Standard Chartered was singled out as the only bank with a specific “shortcoming” related to its restructuring planning capabilities. The BoE expects this issue to be addressed and will monitor progress closely. Four other banks — Barclays, HSBC, Lloyds, and Virgin Money — were advised to enhance certain aspects of their plans. Nationwide, NatWest, and Santander UK emerged without material issues.
The BoE’s Deputy Governor, Dave Ramsden, emphasized that resolvability is an ongoing process with continual lessons to be learned. In light of recent events in the global banking sector, such as the UBS takeover of Credit Suisse and the resolution of Silicon Valley Bank’s UK subsidiary, the BoE stressed the importance of maintaining credible resolution frameworks for systemic banks.
Given the “significant progress” observed since the first assessment, the BoE has decided to postpone the next evaluation by one year to 2026-27.
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