Sam Woods: Bank failures

Speech by Mr Sam Woods, Deputy Governor for Prudential Regulation of the Bank of England and Chief Executive of the Prudential Regulation Authority (PRA), at the Mansion House, London, 16 October 2023. 

The views expressed in this speech are those of the speaker and not the view of the BIS.

Introduction

It's been an extremely eventful year for banking regulators in the UK and elsewhere.

The failures of Silicon Valley Bank (SVB) and Credit Suisse (CS) have prompted renewed public debate about prudential regulation and supervision, and the resolution framework.

I want to use this speech to offer my perspective on these debates. What do recent bank failures say about the global and UK regulatory frameworks, and what should our priorities be going forward?

In doing so, I will hopefully be able to tie the various strands of regulatory work into a coherent single picture.

There is a lot of work to be done to improve and refine the regulatory regime for banks. Recent events illustrate why.

At the same time, there is cause for optimism. Yes, we have seen some pretty dramatic bank failures. But those failures have not led to systemic crises, and have been managed without taxpayers having to absorb banks' losses. Taken in the round, I count that as a success for the post-financial crisis reform effort.

But I would not be much of a prudential regulator if I focused only on the positives, rather than the downside risks! So the bulk of my comments will be focused on the important work underway to improve the prudential framework for banks.