Nobody should be 'too big to fail', Bank deputy says

A deputy at the Bank of England has called for increased controls in the UK banking sector.

Paul Tucker, deputy governor for financial stability, said that no bank should be ’too big to fail’ and that improved measures promoting the ’orderly wind down’ of failing financial firms should be implemented.

Among these proposals is the mandatory disclosure to the authorities of information on each financial firm’s depositor base.

This way, the Financial Services Compensation Scheme (FSCS), which guarantees the first £50,000 of savings for each customer of a failed bank, would be able to work more effectively.

Mr Tucker said: ’Proposals for greater market discipline are not going to gain traction in the real world - the only world that matters - so long as wholesale creditors and others believe and act on the basis that some firms can be ’too big to fail’.’

He added: ’Banks must structure and run themselves to permit orderly wind down.’

The speech follows the collapse of US investment house Lehman Brothers in September last year, a corporate failure which wreaked havoc in the global financial system and greatly worsened the credit crisis. ADNFCR-2318-ID-19245304-ADNFCR