December 18, 2018 / 1:37 PM / 10 months ago

Bank of England shines a light on banks' death throes

LONDON, Dec 18 (Reuters) - Britain’s top banks will have to show the public how they could be closed down without a taxpayer bailout if they got into serious trouble, the Bank of England (BoE) said on Tuesday.

The BoE, which licences and regulates lenders in Britain, published a draft framework for public consultation to increase transparency on how a bank in trouble is closed down or resolved.

Regulators want to avoid a repeat of the 2007-09 financial crisis when Britain had to bail out banks such as Royal Bank of Scotland, angering the public at a time of belt-tightening.

“The framework places the responsibility on banks to demonstrate to the Bank and publicly their preparedness for resolution and that they have identified the risks to successful resolution,” said BoE Deputy Governor Jon Cunliffe.

Banks with at least 50 billion pounds ($63 billion) in retail deposits will have to assess their preparations for potential resolution.

These assessments would have to be submitted to the BoE by September 2020, with a summary published by June 2021.

The BoE would at the same time publish a statement on each of the bank’s assessments, highlighting any shortcomings where it believes there is more work to do.

The assessments would be updated every two years, the first in 2020 reflecting any changes to structures due to Britain’s withdrawal from the European Union, and a requirement from next year to “ring fence” or wrap retail arms with bespoke capital buffers.

The BoE said the proposals were an important step in its commitment to parliament that major UK banks will be fully resolvable by 2022.

“They will make resolution more transparent, better understood and more successful. They will also build on key post-crisis work imposing losses on the investors of failed banks, not taxpayers,” it said.

$1 = 0.7886 pounds Reporting by Huw Jones; Editing by Mark Potter

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