The Bank of England (BoE) has published its second assessment of the eight major UK banks’ readiness for resolution under the Resolvability Assessment Framework (RAF). This evaluation aims to ensure that, in the event of a failure, a major UK bank could be resolved without destabilising the financial system, while maintaining essential banking services. Shareholders and investors, rather than public funds, would bear the costs of such a failure.
In this latest assessment, the BoE reviewed the progress banks have made since the first evaluation in 2022, focusing on how effectively their resolution plans work in practice. The primary emphasis was on ensuring that banks have adequate financial resources in place for a potential resolution.
The BoE’s findings indicate that significant progress has been made. Banks have integrated resolution preparations into their daily operations and addressed issues identified in the previous assessment. This second, more comprehensive review also uncovered new challenges, although none were deemed critical enough to hinder the BoE’s ability to manage a resolution.
Looking forward, the BoE plans to conduct more detailed analyses in future RAF assessments. The next assessment will concentrate on banks’ ability to ensure continuity and execute restructuring plans swiftly to address failure causes and restore viability.
