UK’s Darling to force ‘living wills’ on banks – report
LONDON, Sept 15 (Reuters) – UK Finance Minister Alistair Darling plans to force the country’s banks to draw up ‘living wills’ that would allow them to be dismantled more easily in the event of another financial crisis, the Financial Times reported.
The proposal for banks to simplify their corporate structures and plan for dissolution will be included in new financial services legislation this autumn, it said.
“Whilst (financial regulator) the FSA has got the power to (introduce living wills), we are considering whether … we need to make that more explicit and, in particular, I think we need a timetable,” Darling told the newspaper in an interview published on Wednesday.
Britain holds large stakes in two of the country’s biggest banks, Lloyds Banking Group and the Royal Bank of Scotland, after a sector bailout costing billions of pounds that followed last year’s financial crisis.
The new proposals could expose banks to far higher tax liabilities, the FT said.
Darling also said he had had enough of the “game” of seeing which senior minister would be the first to admit spending cuts will be needed to tackle Britain’s ballooning deficit.
Prime Minister Gordon Brown will use the word “cuts” for the first time in a speech later on Wednesday when he addresses the TUC Conference in Liverpool, according to a report on BBC News at Ten.
Darling signalled he will use his autumn pre-budget statement to identify priority areas for spending, including infrastructure and education, with implied cuts elsewhere, the FT said.
But chopping back government spending in the way envisaged by the opposition Conservatives — way out in front in opinion polls ahead of an election due by next June — would “undermine the fabric of the country”, he said.
Echoing comments made on Tuesday by Business Secretary Peter Mandelson, Darling said deep spending cuts would “choke off the recovery before it has even had a chance to take hold”.