UK Chancellor Darling plans new legislation to prevent bank runs
LONDON – UK Chancellor of the Exchequer Alistair Darling has announced plans to introduce US-style legislation to stop another bank run. The UK’s finance minister has faced criticism over his reaction to last year’s Northern Rock crisis – which marked the first run on a UK bank in almost 150 years.
The new legislation – to be introduced in May – would give the Financial Services Authority (FSA) increased powers to protect customer assets in the event of a bank’s collapse and would increase the size of protected deposits.
Last year saw long lines of customers queuing outside Northern Rock branches to withdraw their money. Under current rules, only the first £2,000 of a customer’s deposits is fully guaranteed, followed by 90% of the next £33,000. New legislation might guarantee deposits up to as much as £100,000.
The UK tripartite system comprising the Treasury, Bank of England and the FSA has been criticised for failing to react promptly to the Northern Rock debacle. Northern Rock has so far received an estimated £26 billion emergency loan from the Bank of England, together with existing government guarantees for customer assets totalling around £57 billion.
More on Regulation
Matherat to Deutsche, O'Malia to Isda - regulatory moves worry some
Record-breaking settlement between Bank of America and US federal and state entities
Top regulators want FSB to fix clash between reporting rules and privacy laws
Chair of Lords subcommittee says UK neglect of Europe is "criminal"
Sign up for Risk.net email alerts
Watch highlights of this year's London conference
Operational risk and the challenges of defining and dealing with conduct risk
Watch discussions and speakers from our North America conference
In the February 2014 editorial video, OpRisk's latest industry survey finds room for improvement in risk management
There are no comments submitted yet. Do you have an interesting opinion? Then be the first to post a comment.