Darling: Banks to be forced to write living wills
CHANCELLOR Alistair Darling has said banks will be forced to draft so-called “living wills” to make it easy to break them up without damaging the wider economy if they collapse in a future financial crisis.
Darling said the Queen’s speech in November will outline the plans, which will force banks to simplify their structures and lay out contingency plans for potential failures.
City regulator the Financial Services Authority (FSA) will also be charged with overseeing financial stability in a new financial services bill to be announced in the speech.
“Whilst the FSA has got the power to introduce living wills, we are considering whether or not we need to make that more explicit, and in particular, I think we need a timetable,” Darling said.
He said it was a “worry” when firms were structured with a focus on minimising tax rather than on financial strength. “This is something you can’t just allow to drag on,” he told the Financial Times.
The new rules, pledged on the one-year anniversary of the collapse of Lehman Brothers, come as administrators face an epic task unwinding the bank’s giant web of assets and liabilities.