Strengthen crisis plans, BoE tells major UK banks

FIVE of Britain’s biggest banks were today ordered to improve their readiness for failure after the sudden demise of major financial institutions in last year’s mini-crash highlighted the speed at which they could collapse.

- Simon Hunt

The Bank of England today named Barclays, HSBC and Lloyds among firms that needed to strengthen preparations against failure.

It warned they must be “sufficiently flexible and able to produce timely and robust estimations of their liquidity needs in a resolution, given the speed at which events can evolve, for example due to rapid deposit outflows”.

The rapid collapse of Credit Suisse and Silicon Valley Bank (SVB) last year sent shockwaves through financial markets. Within a day of SVB’s warning that it needed a capital raise, the firm’s share price sunk 60% and as much as $40 billion, or nearly a third of its deposits, were withdrawn — with a further $100 billion on course to leave.

The UK arm of SVB was acquired in a last-minute rescue deal by HSBC, while Credit Suisse was merged with UBS.