The Government has published its response following its consultation on enhancing the Special Resolution Regime and the Bank Resolution (Recapitalisation) Bill has now started its Parliamentary Passage.
Respondents were generally supportive of the proposals and the suggestion that any funds would be recouped on an ex-post basis, so that banks would only face additional levies if the mechanism was used.
As a result of the proposals, the new Bill will essentially give the BoE more flexibility in dealing with resolution of smaller banks. It will:
- amend FSMA to expand the statutory functions of the FSCS so that the FSCS will be able to provide funds to the BoE on request to meet certain costs that arise from the failure of a bank, and to allow the FSCS to recover funds provided after a failure event through levies on the banking sector; and
- provide the BoE with the ability to require a bank under resolution to issue new shares.