Bailey tells banks not to rely on state bailouts in the future

BANKS should not rely on taxpayers&rsquo; money to bail them out if they are caught out by another crisis, the Bank of England&rsquo;s executive director for banking services Andrew Bailey said yesterday, echoing comments made by the Bank&rsquo;s deputy governor Paul Tucker on Monday.<br /><br />Speaking in Madrid, Bailey said: &ldquo;We cannot justify having a banking system that depends on the use of public money to douse the fire when the crisis comes.&nbsp; And we also cannot allow conditions to exist where risks are taken on the basis that this backstop exists.&rdquo;<br /><br />Bailey focused his speech on what role he saw for banks&rsquo; living wills. Like Tucker, he said that there was a place for contingent capital instruments &ndash; known as CoCos &ndash; in banks&rsquo; recovery plans. <br /><br />Bailey added that banks should play a vital role in establishing these recovery plans. &ldquo;Resolution plans must be produced and owned by the authorities, since only we can determine how best to apply the tools of our regime. But firms have a vital role to play in these plans,&rdquo; he said.<br /><br />He concluded by saying that authorities in the UK were &ldquo;very keen&rdquo; to see real implementation of recovery plans. <br />