The UK’s major banks could be wound down in a crisis without destabilising the financial system, the Bank of England (BoE) has hinted.

Publishing its review for each of the eight major UK banks under the Resolvability Assessment Framework (RAF), the BoE said that if a major bank were to fail today it could “enter resolution safely”.

By this any bank would remain open and continue to provide services, with shareholders and investors – rather than public funds – the first in line to “bear the costs of failure”, the central bank said.

The eight major UK banks used in the BoE’s assessment were Barclays, HSBC, Lloyds Banking Group, Nationwide, NatWest Group, Santander UK, Standard Chartered and Virgin Money UK.

Its assessment also found that the major banks have continued to “make progress” in improving their preparations for resolution, including embedding resolution preparations into their everyday business, and in addressing issues outstanding from the first BoE assessment in 2022.

Deputy governor for markets, banking, payments and resolution, Dave Ramsden, said: “We welcome the progress made by the major UK banks.

“Maintaining a credible and effective resolution regime is a continuous process, and authorities and firms need to respond as the financial system and regulatory landscape evolves. Resolvability will never be ‘done’ and there will always be lessons to learn from putting the regime into practice.”

Following the progress made to date on resolvability and to give both the BoE and major UK banks time to further progress testing of their resolution capabilities ahead of the next assessment, the Prudential Regulation Authority (PRA) will consult on postponing the third RAF assessment by one year to 2026/27, rather than 2025/26.

The BoE said it would engage with the banks over the coming months on their “workplans and anticipated areas of focus” during this period.

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