7  The major UK banks on average now have total loss absorbency of around a quarter of their risk-weighted assets (RWAs) compared to an average end-state requirement of around 28% (including buffers). 8 While no measure is perfect, a range of market-based estimates suggest the implicit ‘too big to fail’ subsidy has fallen sharply since the crisis. Estimates suggest that the value of the implicit subsidy has fallen from around £ in 2010 to less than £ now – down around 90% http://data.parliament.uk/writtenevidence/committeeevidence.svc/evidencedocument/treasury-committee/capital-andresolution/written/69208.pdf 11  All speeches are available online at www.bankofengland.co.uk/speeches  11  If counterparties have confidence that resolution will stabilise a bank so that it can continue to meet its obligations, they will not accelerate actions that could frustrate a resolution to the detriment of all parties. And the public needs to have confidence that we have learned the lessons of the crisis: that we have acted to ensure that we have an alternative to the previous crisis where we had privatisation of bank profits in good times and the socialization of bank losses when things go wrong. 9  For that reason, the Bank committed to Parliament in April 2017 and in the Purple Book last October that from 2019 we would implement public reporting of banks’ resolution plans and our assessment of their effectiveness. This marks an important transition in the implementation of full resolvability in the UK.
Central Clearing and Resolution – learning some of the lessons of Lehmans Speech given by Sir Jon Cunliffe, Deputy Governor Financial Stability, Member of the Monetary Policy Committee, Member of the Financial Policy Committee and Member of the Prudential Regulation Committee  FIA International Derivatives Expo 2018, London Tuesday 5 June 2018  1  All speeches are available online at www.bankofengland.co.uk/speeches  When Lehman Brothers failed in September 2008, the bank was a major player in the worldwide derivatives market. Its $ trillion portfolio of both cleared and uncleared derivatives represented around five percent of the global derivatives market. Following its collapse, Lehman’s uncleared derivative counterparties filed claims totalling $ in relation to its derivatives business. In the event, it was four years before the first payments were made to these uncleared derivative creditors, and claims against Lehman’s are still ongoing. The contrast with Lehman’s cleared derivatives portfolio in CCPs is stark. Lehman Brothers UK subsidiary had a $ trillion cleared interest rate derivatives portfolio at LCH, comprising over 65,000 trades. In the period of extreme market turmoil following the firm’s collapse, it took three weeks, rather than four years, for LCH to hedge and close out the entire $ trillion position. It used only around a third of the collateral margin Lehman had deposited at the clearing house. LCH was only one example of the ability of CCPs to dampen the shock of a major credit counterparty failure.