Policymakers have achieved a “watershed moment” in their attempts to avoid a repeat of the multibillion-pound taxpayer bailouts of the banking system six years ago, the governor of the Bank of England said on Monday.
Mark Carney said new standards being published for 30 of the world’s biggest banks should ensure they hold enough capital to absorb losses they incur, although experts questioned whether this would be a solution to the problem faced by governments since 2008. The move could pressure banks to cut bonuses and dividends as they bolster their balance sheets further.
“Once implemented, these agreements will play important roles in enabling globally systemic banks to be resolved without recourse to public subsidy and without disruption to the wider financial system,” Carney said.
To amass more capital, banks could cut bonuses to staff, reduce dividends to shareholders, issue bonds to raise finance or reduce the risks they take.
Speaking in Basel, Switzerland, in his capacity as chairman of the Financial Stability Board (FSB), Carney was referring to new rules about the amount of capital that must be held by 30 banks designated as “globally systemically important”. Known as G-Sibs, these banks include HSBC and Royal Bank of Scotland and will be required to conform with a new set of rules stipulating how much capital they should hold to cover all their losses in the future.
via The Guardian