WASHINGTON — The Federal Deposit Insurance Corp. and Bank of England announced an agreement for better cooperation during cleanups of international banks.
The memorandum of understanding released Friday said the regulators will share information, consult each other and exchange operational support in handling failures of banks with U.S. and U.K. operations.
The "authorities will take steps to continue and enhance ongoing cooperation and communication … both during normal business-as-usual circumstances and … periods of financial stress," according to the memorandum. "As the condition of a firm deteriorates, it is expected that cooperation between the authorities will intensify as well."
Under a U.K. law passed last year, England's central bank determines the cleanup strategy for an institution that has been placed in resolution by the country's Financial Services Authority. (Insured depositors are covered by a third entity — the Financial Services Compensation Scheme — for up to 50,000 pounds.)
The memorandum, which is nonbinding, said greater contact between U.S. and U.K. agencies is needed in light "of the growing globalization of the world's financial markets and the increase in cross-border operations and activities of financial service firms."
According to the agreement, the memorandum will be reviewed every year and could be changed.
The agreement states that the FDIC and Bank of England will keep each other informed of "emergency situations" involving financial firms in their respective countries as well as regulatory changes that could affect resolution activities.
Both agencies will make staff available to their counterparts to give presentations on their respective agency's workings, the memorandum said.
Michael Krimminger, a senior deputy to FDIC Chairman Sheila Bair, will serve as the contact for the Bank of England. On the other side, the head of the central bank's resolution unit, Andrew Bailey, will serve in a similar role in consulting with the FDIC.
The agreement also allows the regulators to pass along information they receive from their counterpart to other regulatory authorities in their home countries.