PARLIAMENTARY WRITTEN QUESTION
Financial Institutions (19 February 2024)

To ask the Chancellor of the Exchequer, what steps his Department is taking with (a) banks and (b) other financial institutions to improve the financial sustainability of those organisations.

Asked by:
Mr Barry Sheerman (Labour)

The Government is committed to retaining the UK’s position as one of the most innovative and competitive financial centres in the world. The Chancellor recently set out an ambitious reform programme at Mansion House, building on the success of the Edinburgh Reforms, which will help to deliver the Government’s vision for a financial sector that is open, sustainable, technologically innovative, and globally competitive. Additionally, the Financial Services and Markets Act 2023 introduced new secondary objectives for both the Financial Conduct Authority and Prudential Regulatory Authority to facilitate the international competitiveness of the UK economy (including the financial services sector), and its growth in the medium to long term.

Financial stability is a pre-requisite for economic growth and is crucial for the competitiveness of the financial services sector. The government, working closely with the financial regulators, has made major improvements to the resilience of the banking system since the financial crisis with capital requirements for banks now three times higher. The government has also considered it a priority to build resilience in the non-bank system and has been working closely with the regulators and international bodies to achieve this.

The Bank of England also undertakes regular stress tests on the UK’s major banks to test their resilience to severe economic scenarios and for the first time will be undertaking a system wide exploratory scenario which aims to improve the understanding of how banks and non-banks behave during stress and how these behaviours might interact to amplify shocks.

Answered by:
Bim Afolami (Conservative)
27 February 2024