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Great Britain: The British big banks are not much of a crisis

Branch of Lloyds Bank in London

According to the Bank of England, preparedness for the crisis at Lloyds Bank is good, but not enough.


(Photo: Reuters)

London The British Central Bank has criticized the risk rules of major British banks and called for improvements. Eight financial institutions surveyed by the Bank of England (BoE) certify that ordinary bankruptcy proceedings can be terminated in an emergency without the assistance of taxpayers. However, at the same time, central banks were found in the big banks HSBCLloyds and Standard Chartered There are still “flaws” in their solution plans.

Through its first review of contingency plans, the Bank of England sought to ensure that the events of the 2008 financial crisis did not recur. At that time the state was Lloyds and then Royal Bank of Scotland Save them from bankruptcy with billions of dollars in capital aid to avoid economic damage. This problem, known as “too big for failure”, is now largely considered solved.

However, the British government still holds 48 per cent stake in today’s Northeast (formerly the Royal Bank of Scotland). London sold its last stake in Lloyds in 2017. As a lesson from the financial crisis, not only in Great Britain, but also in institutionally important big banks had to significantly increase their capital caches to better absorb economic shocks. They had to legally protect the retail banking business from risky investment banking.

Dave Ramston, deputy governor for markets and banks at the BoE, said the inquiry was “an important part of the UK response to the global financial crisis and how the UK has tackled the problem of ‘failure is too big’.”

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It has been successful in developing solutions that successfully reduce the risks to depositors and the financial system and better protect public funds. Not taxpayers, but investors and shareholders must first bear the financial consequences of a bank failure.

However, central bankers still see weaknesses in the financial stability of some large banks. Lack of capital was the biggest problem in many companies during the financial crisis. The Bank of England has asked HSBC to improve contingency plans for Lloyds and Standard Chartered. Of the eight major banks surveyed, only Spaniard is a subsidiary Santander Bank An impeccable testimony.

Further: Very few bank executives move from London to the EU