Banks ‘too big to fail’ could still get bailout from taxpayer, Bank chief warns

Sir Jon Cunliffe said that while progress had been made towards resolving the problem, further reforms were needed.

The former Treasury mandarin said G20 leaders needed to overcome any divisions to be able to reach agreement on the issue later this year –- and that public mistrust over the sector would not abate until it was resolved.

Sir Jon, who was at the heart of international crisis talks at the height of the financial crisis in November 2008, made the remarks at a conference in London.He said: “Nothing has so incensed public opinion and damaged societal support for the financial sector than the apparent ‘heads I win, tails you lose’ experience of private profits and pay when things went well and public losses when they did not. We will not fully restore public confidence until we can show that we can resolve failing banks – no matter how large – without public support.” He said that although progress had been made the sector could not “say with confidence now that we could resolve a failing global giant”.

When Lehman Brothers collapsed in 2008, it sent shock waves throughout the financial system. Later the US government decided it must step in to save insurance giant AIG.

In the UK, Royal Bank of Scotland and Lloyds Banking Group both had to be rescued by taxpayers. Sir Jon, speaking at the Chatham House City Series conference, outlined progress that had been made since G20 leaders agreed at that time that no institution could be “too big to be allowed to fail”.