BOE Gieve Gives Details Of Special Resolution Regime -Report

BOE Gieve Gives Details Of Special Resolution Regime -Report

LONDON -(Dow Jones)- Bank of England Deputy Governor for Financial Stability John Gieve Monday spelled out some details of how the Special Resolution Regime, which came into force Saturday through the new Banking Act, will work.

Writing in U.K. daily The Telegraph, Gieve said under the SRR, which is a last resort, the BOE can choose between a range of options including transferring all or part of a struggling business to a commercial purchaser directly or through a bridge bank. It could also close the institution, or the treasury could place it into temporary public ownership.

Which of these options the bank chooses, will be guided by several goals, Gieve said, namely protecting and enhancing the stability of the U.K. financial system and public confidence in it; protecting depositors and public funds; and avoiding interfering with property rights, as well as more practical considerations like the salability of assets.

"No system can or should prevent all failures of banks and building societies," Gieve wrote.

"The new act will allow failing banks to close in an orderly way that protects depositors and minimizes the costs to the broader financial system and the economy generally," he added.

He also said the BOE has established a new Special Resolutions Unit to lead the work.

-By Natasha Brereton, Dow Jones Newswires; +44 207 842 9254; [email protected]

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(END) Dow Jones Newswires

February 23, 2009 04:04 ET (09:04 GMT)

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