LONDON, Dec 15 (Reuters) - Britain will set out on Wednesday disaster recovery plans that investment banks should follow to ensure orderly wind-ups in any future crises.
Learning from the lesson of last year's collapse of U.S. investment bank Lehman Brothers, Treasury minister Paul Myners will launch a consultation document on how to deal better with bank failure in the future.
The authorities feel that the creation of so-called 'living wills' are essential for future financial stability.
The Treasury will propose that banks keep a central data repository system where knowledge of all deals can be contained so that there can be a better idea of counterparty exposure if things go sour, officials said.
Under the proposals, banks will also have to appoint Business Resolution Officers to help with orderly wind-downs and ensure continuity of service measures.
The latter would involve insolvency-proof contracts and the money to pay them for key staff such as IT and compliance.
Separately, the Treasury will publish jointly with the Financial Services Authority a submission to the European Commission tstating that it believes there will always be certain bespoke derivatives that cannot be cleared centrally.
The paper will agree with the commission that every OTC product that can be moved onto an exchange should be and every product that can be moved to central clearing parties should be.
'However, we also strongly believe there should be certain bespoke products that will not be cleared centrally,' an official said.
For example, there could be a useful place for bilateral derivatives between companies. Keywords: BRITAIN BANKS/WILLS (Reporting by Sumeet Desai; Editing by Victoria Main; Reuters messaging: sumeet.desai.reuters.com@reuters.net; +4420 7542 7708) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.
Learning from the lesson of last year's collapse of U.S. investment bank Lehman Brothers, Treasury minister Paul Myners will launch a consultation document on how to deal better with bank failure in the future.
The authorities feel that the creation of so-called 'living wills' are essential for future financial stability.
The Treasury will propose that banks keep a central data repository system where knowledge of all deals can be contained so that there can be a better idea of counterparty exposure if things go sour, officials said.
Under the proposals, banks will also have to appoint Business Resolution Officers to help with orderly wind-downs and ensure continuity of service measures.
The latter would involve insolvency-proof contracts and the money to pay them for key staff such as IT and compliance.
Separately, the Treasury will publish jointly with the Financial Services Authority a submission to the European Commission tstating that it believes there will always be certain bespoke derivatives that cannot be cleared centrally.
The paper will agree with the commission that every OTC product that can be moved onto an exchange should be and every product that can be moved to central clearing parties should be.
'However, we also strongly believe there should be certain bespoke products that will not be cleared centrally,' an official said.
For example, there could be a useful place for bilateral derivatives between companies. Keywords: BRITAIN BANKS/WILLS (Reporting by Sumeet Desai; Editing by Victoria Main; Reuters messaging: sumeet.desai.reuters.com@reuters.net; +4420 7542 7708) COPYRIGHT Copyright Thomson Reuters 2009. All rights reserved. The copying, republication or redistribution of Reuters News Content, including by framing or similar means, is expressly prohibited without the prior written consent of Thomson Reuters.