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Bank of England says banks need to restructure

Bank of England says banks need to restructure

Banks need to radically simplify their structures and provide more information about what funds they would use in an emergency, the Deputy Governor of the Bank of England said Tuesday.
Paul Tucker said this was "important to bring about the kind of regime shift necessary to restore confidence and trust in the industry without a government prop," but warned that such radical change will "not be easy and it will not be cheap."
Tucker said that some banks that are deemed "too big to fail" need a structural overhaul to aid rescue attempts, and added that all banks also need detailed contingency planning and information in place to help in times of crisis.
"Banks must structure and run themselves to permit orderly wind down," he said in a speech to the British Bankers' Association annual conference in London. "And they must invest to provide the authorities with the information they need to do so."
This "must surely entail a radical simplification of some group structures," he said, but warned it will "not be easy and it will not be cheap."
The second in command at the central bank also reiterated calls for a pre-funded insurance program for savings deposits that is also risk-based to ensure the industry bears the cost of failure.
Tucker said that the banking sector should consider a risk-based and pre-funded 100 percent insurance scheme to cover all retail deposits.
"This crisis has reminded a generation of some old truths. Banks can fail," Tucker said. "Going forward, we cannot have a regime where the upside for risk-taking goes to shareholders and management, but the downside falls to the general taxpayer."


Updated : 2021-04-20 09:02 GMT+08:00