States approve new bank resolution law

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BANKS in Jersey will need to comply with new provisions and pay annual levies, following States approval of a new law to protect retail customers and the public purse.

The Bank (Recovery and Resolution) Law, due to come into force later this year, is designed to make sure that critical functions continue if a bank should fail and to minimise the use of public funds if a financial bail-out is required.

The law has been introduced in response to G20 recommendations following the banking meltdowns that occurred during the 2008/9 financial crisis and is based on the European Union's Bank Recovery and Resolution Directive and the UK's Special Resolution Regime.

Although none of the banks with a presence in Jersey failed at the time of the crisis, customers of the Guernsey branch of Icelandic bank Landsbanki lost over 8% of their deposits. The UK government was also forced to bail out RBS – of which over 70% is still in government ownership – and Lloyds Bank.

Full report in The Business in Wednesday's JEP.

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