KUALA LUMPUR, July 29 (Bernama) -- Bursa Malaysia rebounded to close higher on Wednesday on selective buying of defensive stocks after a volatile trading session. IPPFA Sdn Bhd director of investment strategy and country economist Mohd Sedek Jantan said consumer products and services stocks lifted the key index higher, overcoming lingering geopolitical concerns. At 5 pm, the FTSE Bursa Malaysia KLCI (FBM KLCI) rose 3.08 points to 1,715.56 from yesterday’s close of 1,712.48. The benchmark index, which opened 1.91 points higher at 1,714.39, moved between 1,710.79 and 1,720.59 during the day’s trading. In the broader market, gainers outstripped decliners 550 to 476, while 612 counters were unchanged, 1,129 untraded, and 48 suspended. Turnover rose to 2.96 billion units valued at RM2.48 billion from 2.94 billion units valued at RM2.56 billion on Tuesday.
The Bank of England (BOE) announced on Tuesday that the UK's top eight banks, including HSBC, Barclays, Lloyds, and NatWest, can be wound down in a crisis without needing taxpayer-funded bailouts.
Here are the key takeaways:
Key Points:
Resolution Check: The BOE's second "resolvability" check confirms that major UK banks could be closed down safely, maintaining vital banking services without destabilizing the financial system. Shareholders and investors, not public funds, would bear the costs of a bank's failure.
Lessons from the Financial Crisis: This ability to resolve banks without bailouts is a critical lesson learned from the 2007-09 global financial crisis, during which many banks were rescued with taxpayer money.
Assessment Results:
- The BOE assessed banks like Santander UK, Standard Chartered, Virgin Money UK, and Nationwide. It found some areas needing improvement but no significant issues that would hinder a bank's resolution in a crisis.
- Standard Chartered was identified with a "shortcoming" in its restructuring planning capabilities, which the bank is expected to address.
- Barclays, HSBC, Lloyds, and Virgin Money need to enhance certain aspects of their resolution plans.
- Nationwide, NatWest, and Santander UK had no material issues.
Global Resolution Rules: New international rules ensure banks have credible plans to manage a potential collapse, such as transferring deposits to other lenders and ensuring payment continuity.
Challenges to Resolution Rules: Recent events, like the forced takeover of Credit Suisse by UBS with central bank support, have challenged the credibility of global resolution rules. The BOE also had to intervene when Silicon Valley Bank's UK subsidiary faced collapse.
Ongoing Commitment: The BOE emphasizes the importance of maintaining credible resolution plans for globally significant banks. BOE Deputy Governor Dave Ramsden stated that resolvability will always require improvements and adaptation.
Future Plans: Due to significant progress since the first test, the BOE will delay the next resolvability check to 2026-27.
Conclusion:
The BOE's findings reassure that the UK's major banks can handle crises without immediate taxpayer bailouts. While some areas need improvement, the progress made since the financial crisis highlights the strength and resilience of the UK's banking sector.
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