Banks given more time to meet new rules aimed at preventing taxpayer bailouts
Britain's lenders have been given an extra two years to meet new rules designed to prevent the mammoth taxpayer bailouts seen in the financial crisis.
The Bank of England announced it has given banks until 2022 to comply with regulations forcing them to hold enough money to absorb losses, which could be drawn down in the face of collapse to finance an orderly wind-down.
Governor Mark Carney said: "This policy is a significant milestone on the journey to end 'too big to fail' in the UK."
He added the new rules will "ensure that banks that provide essential economic functions hold sufficient resources to be resolved in an orderly way, without recourse to public funds, and whilst allowing households and businesses to continue to access the services they need".
The new rules will apply to banks with more than 80,000 accounts - double the threshold first suggested by the Bank.
UK banks have already been building up significant balance sheet buffers since the 2008 financial crisis and the shortfall to meet these new rules now stands at around £20 billion.
The Bank said: "These rules represent one of the last pillars of post-crisis reforms designed to make banks safer and more resilient, and to avoid taxpayer bailouts in future."
"The Bank of England now has the legal powers necessary to manage the failure of a bank, and significant progress has been made to ensure there is co-ordination between national authorities should a large international bank fail," it said.
The Government was forced to step in and bail out Royal Bank of Scotland and Lloyds Banking Group at the height of the crisis, spending £46 billion and £20.5 billion respectively of taxpayer cash.
It also nationalised lender Northern Rock and Bradford & Bingley and is still fighting to recoup taxpayer cash.