9/22/2023 0 Comments Resolutione conomics![]() Resolving a major bank will always be hard to execute but we work with banks to make sure they are prepared for resolution and we can carry out our resolution plans if they fail. Since 2009, we have used the resolution regime for two firm failures. It is consistent with international standards for resolution regimes. The UK regime has been improved and expanded so it remains fit for purpose. The UK established a framework for resolution (known as the ‘resolution regime’) in the Banking Act 2009. These banks were ‘too big to fail’.Īfter the financial crisis, the UK, like many other countries, took action so there would be better options if a large bank were to fail in future. If a large bank had failed then, it would have caused serious problems for many people, businesses and public services. Governments – including the UK’s – felt they had no choice but to bail the banks out. In 2008, banks in many countries were in financial distress. You can watch our video on what happens when a bank or building society fails and what we do. In these cases, shareholders and certain creditors take the losses. We would need to resolve those to protect the UK’s vital financial services and financial stability. In some specific situations, it can be more eg if a depositor has just sold a house.īut the largest or most complex firms could not go into insolvency. If a firm’s failure would otherwise result in losses for depositors, the FSCS will protect eligible depositors, up to £85,000. Our resolution regime operates alongside the depositor protection regime. Eligible depositors in failed firms would either receive compensation from the FSCS within seven days or have their accounts transferred to another firm. ![]() Most UK firms would be put into insolvency if they failed, because that wouldn’t disrupt the economy or financial system. What we do if a bank or building society fails
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