World’s Biggest Banks Could Fail Stress Test
HSBC and Barclays are among the banks which need to undertake reforms
9:13pm UK, Saturday November 05, 2011
The financial stability board (FSB) has given the 29 banks, including Royal Bank of Scotland, Lloyds TSB, HSBC and Barclays until next October to pass tests which would enable them to be safely dismantled if they went bust.
They must also carry out far-reaching changes to prove they would not have to be supported by the Government if they did near collapse.
The test stemmed from the collapse of Lehman Brothers, which many believe triggered the global recession.
Sky’s economics editor Ed Conway stated the 29 banks also included other household names such as Goldman Sachs and Morgan Stanley.
“If they do not pass the test, the truth is that each regulatory authority around the world then will have the power to be able to tell them to do something about it and to intervene if necessary.
“The point is to bring the world’s financial system to a say where some of the banks can fail without taking the entire system down with them.
“The effort is to create a world where there is no bank that is too huge to fail, but right now, according to the authorities and the people who know, we are a long way off that.”
source : news.sky.com
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