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 "It is astonishing that officials in countries are still largely
ill-equipped to deal with a Lehman Brothers-style bankruptcy, where
assets and liabilities are scattered across multiple jurisdictions
and entities," Jose Vinals, tasked with financial oversight at the
IMF, said in a blog post.
The 2008 bankruptcy of investment bank Lehman Brothers marked the
height of the global credit crisis, and many of the reforms that
have since been implemented were aimed at preventing a repeat of
such a collapse.
During the financial crisis, a number of the world's big banks were
bailed out by governments with billions of dollars in taxpayer
money.
"The not-so-good news is that, despite these efforts, implicit
subsidies to these systemically important financial institutions
remain too large," Vinals said, who said a related IMF study was due
in April.
The problem of so-called too-big-to-fail banks is a priority for
regulators in the Group of 20, which is due to convene in November
and expected to discuss a global financial reform agenda, Vinals
said.
The G20 includes Argentina, Australia, Brazil, Canada, China,
France, Germany, India, Indonesia, Italy, Japan, the Republic of
Korea, Mexico, Russia, Saudi Arabia, South Africa, Turkey, the UK,
the United States and the European Union.
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The Basel III bank capital rules require banks to borrow less to
fund their business, so they are better able to deal with problems.
Governments have also told banks to draw up plans that would enable
them to systematically unwind their businesses if the necessity
arose.
The United States and Europe are putting into place so-called
resolution authorities that would protect the wider financial system
without the use of taxpayer funds in the event a bank needed to be
bailed out.
Vinals said the G20 had "yet to do much of the heavy lifting" to
sort out what would happen if a bank with major operations abroad
were to go under.
(Reporting by Douwe Miedema; editing by
Toni Reinhold)
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