Regulation

Bank of England sets out new resolvability rules for UK banks

Major UK banks, with £50bn or more in retail deposits, will need to set out their preparations for resolution by 2022.

Rozi Jones
|
30th July 2019
Bank of England BoE
"We have made major reforms since the financial crisis to make firms resolvable and ensure that those who profit from banks’ success also pay when they fail."

The Bank of England and the Prudential Regulation Authority have finalised the last major piece of the UK's resolution regime for banks.

The Resolvability Assessment Framework helps to protect the economy and taxpayers from bank failure by reducing risks to depositors, the financial system, and public finances.

The Bank of England will assess firms against three resolvability outcomes they must meet by 2022: i) having adequate financial resources, ii) being able to continue to do business through resolution and restructuring, and iii) being able to communicate and coordinate within the firm and with authorities.

This applies to all UK firms with a bail-in or partial transfer resolution strategy and material UK subsidiaries of overseas-based firms.

The PRA rules require major UK banks, with £50bn or more in retail deposits, to assess their preparations for resolution, submit reports of their assessment to the PRA and publicly disclose a summary of their report. Firms will submit the first of these reports on their resolution assessments to the PRA by October 2020 and publicly disclose their summaries by June 2021.

The Bank says the framework is an important step towards delivering its commitment to Parliament that major UK banks will be resolvable by 2022.

Deputy governor for financial stability, Jon Cunliffe, said: “We have made major reforms since the financial crisis to make firms resolvable and ensure that those who profit from banks’ success also pay when they fail.

"Increased transparency about the resolution regime is in the public’s interest and also incentivises firms to make further progress on their resolvability.”

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