BoE hopes to prevent 2008-type taxpayer bailouts

It suggested that shareholders and investors would be first in line to cover bank’s losses in the event of failure, rather than an immediate taxpayer handout.

The report marked a shift from the 2008 financial crisis, which saw huge taxpayer bailouts for financial institutions.

NatWest Group (then known as Royal Bank of Scotland), for example, received £45.5bn from the public purse as the government committed to averting a collapse in the banking system. Last year, it plead guilty to money laundering charges.

A total of £137bn of taxpayers’ money was lavished to stabilise the crisis.

BoE’s assessment found that even if a major UK lender was to collapse, customers would nevertheless be able to access accounts, and banks could broadly provide normal service.

Its findings said customers could still access accounts despite any collapse, but noted shortcomings at banks including Lloyds, HSBC and Standard Chartered.

BoE recommended the organisations address shortcomings that might “complicate unnecessarily” an ability to fail safely.

Each lender was found to either not have correct financial resources, or adequate data and measurements of them, to guard against absorbing losses without risking public money.

The lenders will have until 2024 – when the next assessment takes place – to address the shortfalls. The assessment covered eight high street banks in total, including Barclays, Nationwide, NatWest, Santander UK and Virgin Money UK.

Dave Ramsden, a Bank of England deputy governor, said: “The UK authorities have developed a resolution regime that successfully reduces risks to depositors and the financial system and better protects the UK’s public funds.

“Safely resolving a large bank will always be a complex challenge so it’s important that both we and the major banks continue to prioritise work on this issue.”