The UK Financial Services Authority is requiring major UK banks to draft "living wills" detailing how they could be wound down without damaging the financial system, if they experience difficulties. Some large banks will need to simplify their structures to facilitate this process. The FSA also advocates higher capital requirements for banks that are too big to fail on a national level, to help internalize the costs of risks to the financial system.

1. UK banks should draw up living wills-FSA
LONDON, Oct 22 (Reuters) - Britain's economic guard dog claimed on Thursday bankings need to
start drawing up living wills so they could be wound up swiftly in times of problem without
destabilising the wider monetary system.
The Financial Services Authority stated a handful of huge UK bankings will have begun formulating
such emergency strategies by the end of the year, a step it anticipates will certainly call for some
company versions to be streamlined.
The FSA has been galvanised right into action after Britain was required to utilize billions of
taxpayer money to bolster banks such as Northern Rock, Bradford & & Bingley, RBS < RBS.L > and
Lloyds <."Restructuring can consist of clear splitting up between retail down payment taking
business as well as companies engageded in exclusive trading activities, with the last able to neglect
also if the former were sustained in situation conditions," the FSA stated.
There is also solid instance for applying some form of funding as well as liquidity additional charge
worldwide on banks considered as well huge to fall short without broader damage or also big for one
nation to rescue, the guard dog said.
" A capital surcharge could possibly be integrated with an approach to worldwide financial groups
which puts greater emphasis on the standalone durability of national subsidiaries, with over
understanding that residence nation authorities will certainly not accountable for the rescue of
whole teams," the FSA said.
The FSA was clear that few of its referrals would be embraced unilaterally in the meantime, as it has
attracted much objection for going out on an arm or leg with harder liquidity guidelines.
The mass of its referrals summarize exactly what the watchdog is looking for at the international
degree, although several are already being functioned on in global physical bodies such as the Basel
Committee on Financial Direction and also the Financial Security Board.
The Basel Committee is readied to finalise greater degrees of core funding requirements by the end
of 2010 when harder trading publication resources policies work.
" The instructions of trip is clear: the total degree of funding in the banking system need to be
considerably increased in time," FSA Chairman, Adair Turner claimed in a statement.
The guide consists of the 2nd boating of referrals complying with a review of the financial crisis by
Turner.
The guide mirrors many efforts being taken at the international degree by the G20 to use driving
lessons from the credit rating crunch such as elevating trading and core funding demands as well as
requiring main clearing of OTC by-products trades by the end of 2012 at the newest.
Last month the G20 group of countries set an end of 2010 deadline for all important banks to create
backup strategies for a rapid wind up if they acquire into problem.

2. ((Reuters messaging: huw.jones.reuters.com@reuters.net; + 44Â 207Â 542Â 3326;
huw.jones@thomsonreuters.com; Modifying by Victoria Key))
Keywords: BRITAIN FINANCIAL/REGULATION
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