The Bank of England (BoE) has found that major UK banks would not need to be bailed out by the public if they were to fail.
In its second resolvability assessment of major UK banks publication, the central bank found that a “major UK bank could enter resolution safely if needed: remaining open and continuing to provide vital banking services, with shareholders and investors – not public funds – first in line to bear the costs of failure”.
The BoE assessed HSBC, NatWest, Nationwide, Barclays, Virgin Money, Santander, Lloyds Banking Group and Standard Chartered.
On the whole, no material issues were found, but the central bank did identify areas that could be improved.
It said following the global financial crisis, the purpose of reforms was to make “resolution a cornerstone of financial stability and essential to protect the public purse”.
The central bank said the resolution of Silicon Valley Bank, which collapsed in March last year and was subsequently acquired by HSBC for £1, showed it was “ready and able” to protect financial stability when needed.
“Resolution, especially of a large bank, will never be easy to execute given the complexity and risks – but it is better than the alternative of bailing out a failed bank with public funds,” it added.
The BoE postponed its third assessment by one year to 2026-27 and said this would focus on the continuity and restructuring outcome of UK banks. This will include an assessment of their readiness to plan quickly for restructuring options to address the causes of failure and restore viability.
Dave Ramsden, deputy governor of the BoE, said: “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. We welcome the progress made by the major UK banks.
“The Financial Stability Board’s [FSB’s] report on the preliminary lessons learnt from the 2023 bank failures concluded that the international framework for bank resolution remains sound, but also that authorities and firms have important work to do to ensure the effective implementation of that framework: resolvability will never be ‘done’ and there will always be lessons to learn from putting the regime into practice.”
Shekina is the deputy editor at Mortgage Solutions and commercial editor at Mortgage Solutions and Specialist Lending Solutions. She has nearly eight years of experience in the B2B publishing market, having previously covered the hospitality, retail, pet, accounting and jewellery sectors.
Shekina has worked for Mortgage Solutions and Specialist Lending Solutions for almost five years. Here, she covers the market’s breaking news stories, engages with professionals in the sector, and oversees any commercially agreed content in partnership with mortgage-related companies.
This includes presenting webinars and hosting roundtable discussions on developing themes in the mortgage sector.
She is an NCTJ-trained journalist and was nominated for the Headline Money Awards Mortgage Journalist of the Year in 2021.
In her spare time, Shekina likes to read, travel, listen to music and socialise with friends.
She currently reports on current events in the mortgage market and liaises with financial clients to produce sponsored content.
Follow her on Twitter at @ShekinaMS
