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Government to strengthen resolution arrangements for investment banks
Financial Services Secretary Paul Myners today published a report setting out the Government's initial thinking on reforms to strengthen the UK's ability to deal with the failure of an investment bank.
Like other financial centres, London was affected by the collapse of Lehman Brothers in September 2008 and the events that followed. The Government is committed to implementing reforms that will enable an easier resolution of a failing investment bank should any such event happen again.
The report outlines the Government's thinking on the changes to market practice, regulation, and insolvency law that might be needed to deal with any future failue of a major investment bank.
The report considers the treatment of investment banking clients after default, the future of their assets, and the treatment of their open or unreconciled trading positions. It also examines what can be done to make the process of insolvency more effective, and to limit the damage that may be done by a failing investment bank.
These reforms are part of a package of steps aimed at renewing the financial services sector, other aspects of which will be laid out in the Government's forthcoming paper on financial regulation.
The reforms which are considered in this report demonstrate the Government's commitment both to financial stability, and to the future of London as a global investment banking hub.
Commenting on the report, Paul Myners said:
"The
UK's insolvency regime is an important aspect of its
attractiveness as an international centre for investment banking.
The Government is committed to maintaining these advantages and
strengthening the existing solvency regime."
Notes for Editors
1. The Government committed in the
Pre-Budget Report to conducting a review of the insolvency
arrangements for investment banks.
2. The Government has received advice from an Advisory Panel of industry experts, comprising investment banks, their clients and counterparties, and legal, insolvency and other professionals.
3. The Government welcomes responses to the issues and questions raised in the paper by 10 July 2009.
4. The report can be found at: http://www.hm-treasury.gov.uk/consult_investment_banks.htm
Non-media enquiries should be addressed to the Treasury Correspondence and Enquiry Unit on 020 7270 4558 or by e-mail to public.enquiries@hm-treasury.gov.uk
This Press Release and other Treasury publications are available on the HM Treasury website hm-treasury.gov.uk
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