Bank of England highlights shortcomings in HSBC, Lloyds, Standard Chartered

Broadly speaking, the Bank of England found that banks have resolved the so-called “larger-than-failed” issues that surfaced during the global financial crisis in 2007–09. UK lenders could be wound up in crisis situations without requiring taxpayers to bail out, it said.

The Bank of England said lenders would be able to remain open and continue to provide services if they encountered trouble, and would put shareholders and investors on the hook for the banks’ losses.

Compared to the financial crisis, Dave Ramsden, deputy governor of markets and banking at the Bank of England, said, “Banks are in a fundamentally better place to do their job in preparing solutions.”

Still, the regulator said it was working with lenders to improve procedures relating to potential bank failures. The central bank said HSBC needs to improve its analysis of how it will fund itself in such a situation. It also found fault with the lender’s approach to possible restructuring. It criticized Lloyd’s funding analysis, saying the bank’s current plans could stifle the leadership’s ability to make “timely and sound decisions”.

The central bank told Standard Chartered that it needed to improve its model relating to its valuation, and its analysis relating to the collateral balance that would be available in a reconciliation situation.

The three banks on Friday said they are working on improving their resolution plans.

The central bank identified “areas for further growth” in other lenders, defined as less severe than deficiencies but still in need of improvement. UK unit of

Santander Bank Feather

The appraisal was the only lender to come through without criticism. A Santander executive said the bank was encouraged that the Bank of England “did not identify any material issues” in its resolution plans.

The Bank of England said it would reevaluate lenders in 2024 and every two years.

write to Julie Steinberg julie.steinberg@wsj.com