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BoE highlights UK banks’ shortcomings on plans to fail ‘safely’

HSBC, Lloyds Banking Group and Standard Chartered have “flaws” in their plans to ensure they can fail without hurting customers and taxpayers, the Bank of England said on Friday.

The regulator instructed them to fix issues including how they would fund themselves if they encountered a problem and how they would serve customers smoothly.

The BoE said five more big ones Banks in the UK “Improvements” must be made to their solution plans, which we were ordered to create as part of the 2019 marches to ensure that the 2007-08 crisis rescue does not repeat itself. The Spanish envoy of the Spanish Santander was the only one of the top eight UK banks to reach the BoE’s first assessment of lenders’ resolution plans without any recommendations.

God BoE Stressed that while there are many areas for improvement, all banks may safely fail to “remain open and continue to provide essential banking services to the economy.”

HSBC, the UK’s largest bank by assets, has been instructed to improve its self-financing strategy through a crisis, and to improve its plans for how it will be restored during its demise.

In its statement, HSBC said It has been asked to take steps to improve the resolution capability of its international infrastructure, which spans 64 countries and territories.

“The changes that will be required to this infrastructure to support certain reorganization operations that may need to be resolved will be complex,” the bank said, adding that the work will be done over a “multi-year period.” HSBC shares were down 0.4% in pre-market trading.

The BoE has also identified issues with Lloyds’ plan to fund itself through a solution, including its ability to make “timely and firm decisions” about its liquidity. In its statement, Lloyds said it was already making some improvements that would address BoE concerns and that it would continue to communicate with regulators.

Standard Chartered and NatWest have also been criticized for their plans to ensure they can operate smoothly through a crash.

Standard Chartered, which the BoE says were lacking in the way it values ​​collateral, said it is improving its liquidity analysis tool, and will complete the work by March 2023.

NatWest’s topics included “several aspects of document-keeping for critical services and contracts, and our preparations for funding our solution (FiR).” “We continue to communicate with the BoE at these points.”

Barclays said It “identified several areas for further refinement, including further process optimization and the use of automation if necessary, which it will continue to promote.”

“A secure solution for a large bank will always be a complex challenge and so it is important that both we and the large banks continue to prioritize work on this issue,” said Sir Dave Ramsden, vice president of markets and banking at the BoE, on Friday.

BoE highlights UK banks’ shortcomings on plans to fail ‘safely’ Source link BoE highlights UK banks’ shortcomings on plans to fail ‘safely’

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