LONDON: Bank regulators are better prepared to cope with the potential failure of a major bank but more work needs to be done on the finer detail of legal agreements covering bank resolution and derivatives trade reporting, the Financial Stability Board said.

The FSB set out its views on how the reforms introduced after the collapse of Lehman Brothers nearly eight years ago in a second annual report to the G20 countries, whose leaders are meeting next week in Hangzhou, China.

“This significant progress must not lead to complacency,” said Mark Carney, governor of the Bank of England and chairman of the FSB.

“Our priorities must be to implement our past agreements in a full, timely and consistent manner.”

The organisation singled out the European Union as a jurisdiction which had deviated from the intended rules in its application of the Basel III bank capital framework. The FSB report called on G20 leaders to ensure such rules were implemented on a more even basis.

It said it was disappointing only half of the 30 global systemically important banks (G-SIB) had produced cooperation agreements with regulatory authorities in countries beyond their home jurisdiction about how to wind down the bank in the event of its failure, or resolve its difficulties.

Only two banks had produced these vital agreements over the last year. “Effective resolution planning and the orderly resolution of a cross-border bank require national authorities to have legal powers and efficient processes for sharing information,” said the report.

Published in Dawn September 1st, 2016